Correlation Between LOPX and IShares Micro

Can any of the company-specific risk be diversified away by investing in both LOPX and IShares Micro 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 LOPX and IShares Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LOPX and iShares Micro Cap ETF, you can compare the effects of market volatilities on LOPX and IShares Micro 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 LOPX with a short position of IShares Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOPX and IShares Micro.

Diversification Opportunities for LOPX and IShares Micro

0.0

Correlation Coefficient

LOPX  IShares Micro

Pay attention - limited upside

The 3 months correlation between LOPX and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LOPX and iShares Micro Cap ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Micro Cap and LOPX 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 LOPX are associated (or correlated) with IShares Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Micro Cap has no effect on the direction of LOPX i.e., LOPX and IShares Micro go up and down completely randomly.

Pair Corralation between LOPX and IShares Micro

If you would invest (100.00) in LOPX on January 19, 2024 and sell it today you would earn a total of  100.00  from holding LOPX or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LOPX  vs.  iShares Micro Cap ETF

LOPX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOPX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, LOPX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Micro Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Micro Cap ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares Micro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LOPX and IShares Micro

The main advantage of trading using opposite LOPX and IShares Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOPX position performs unexpectedly, IShares Micro 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 IShares Micro will offset losses from the drop in IShares Micro's long position.

The idea behind LOPX and iShares Micro Cap ETF 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.