Correlation Between Luna Innovations and Bram Indus
Can any of the company-specific risk be diversified away by investing in both Luna Innovations and Bram Indus 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 Luna Innovations and Bram Indus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luna Innovations Incorporated and Bram Indus, you can compare the effects of market volatilities on Luna Innovations and Bram Indus 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 Luna Innovations with a short position of Bram Indus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luna Innovations and Bram Indus.
Diversification Opportunities for Luna Innovations and Bram Indus
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luna and Bram is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Luna Innovations Incorporated and Bram Indus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bram Indus and Luna Innovations 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 Luna Innovations Incorporated are associated (or correlated) with Bram Indus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bram Indus has no effect on the direction of Luna Innovations i.e., Luna Innovations and Bram Indus go up and down completely randomly.
Pair Corralation between Luna Innovations and Bram Indus
Given the investment horizon of 90 days Luna Innovations Incorporated is expected to under-perform the Bram Indus. In addition to that, Luna Innovations is 2.72 times more volatile than Bram Indus. It trades about -0.31 of its total potential returns per unit of risk. Bram Indus is currently generating about -0.02 per unit of volatility. If you would invest 15,570 in Bram Indus on January 24, 2024 and sell it today you would lose (490.00) from holding Bram Indus or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Luna Innovations Incorporated vs. Bram Indus
Performance |
| Timeline |
| Luna Innovations rporated |
| Bram Indus |
Luna Innovations and Bram Indus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luna Innovations and Bram Indus
The main advantage of trading using opposite Luna Innovations and Bram Indus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luna Innovations position performs unexpectedly, Bram Indus 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 Bram Indus will offset losses from the drop in Bram Indus' long position.| Luna Innovations vs. ESCO Technologies | Luna Innovations vs. Genasys | Luna Innovations vs. Cepton Inc | Luna Innovations vs. MKS Instruments |
| Bram Indus vs. Neto ME Holdings | Bram Indus vs. Aryt Industries | Bram Indus vs. Kerur Holdings | Bram Indus vs. Globrands Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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