Correlation Between LRAD and Electro Sensors
Can any of the company-specific risk be diversified away by investing in both LRAD and Electro Sensors at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LRAD and Electro Sensors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LRAD Corporation and Electro Sensors, you can compare the effects of market volatilities on LRAD and Electro Sensors and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LRAD with a short position of Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of LRAD and Electro Sensors.
Diversification Opportunities for LRAD and Electro Sensors
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LRAD and Electro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LRAD Corp. and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and LRAD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LRAD Corporation are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of LRAD i.e., LRAD and Electro Sensors go up and down completely randomly.
Pair Corralation between LRAD and Electro Sensors
If you would invest 408.00 in Electro Sensors on January 25, 2024 and sell it today you would earn a total of 5.00 from holding Electro Sensors or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
LRAD Corp. vs. Electro Sensors
Performance |
| Timeline |
| LRAD |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Electro Sensors |
LRAD and Electro Sensors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LRAD and Electro Sensors
The main advantage of trading using opposite LRAD and Electro Sensors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LRAD position performs unexpectedly, Electro Sensors can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Electro Sensors will offset losses from the drop in Electro Sensors' long position.The idea behind LRAD Corporation and Electro Sensors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Electro Sensors vs. ESCO Technologies | Electro Sensors vs. Mesa Laboratories | Electro Sensors vs. Vishay Precision Group | Electro Sensors vs. Sensata Technologies Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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