Correlation Between LG Display and Maximus
Can any of the company-specific risk be diversified away by investing in both LG Display and Maximus 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 LG Display and Maximus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Maximus, you can compare the effects of market volatilities on LG Display and Maximus 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 LG Display with a short position of Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Maximus.
Diversification Opportunities for LG Display and Maximus
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between LPL and Maximus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and LG Display 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 LG Display Co are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of LG Display i.e., LG Display and Maximus go up and down completely randomly.
Pair Corralation between LG Display and Maximus
Considering the 90-day investment horizon LG Display Co is expected to generate 2.69 times more return on investment than Maximus. However, LG Display is 2.69 times more volatile than Maximus. It trades about -0.01 of its potential returns per unit of risk. Maximus is currently generating about -0.13 per unit of risk. If you would invest 420.00 in LG Display Co on February 1, 2024 and sell it today you would lose (5.00) from holding LG Display Co or give up 1.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
LG Display Co vs. Maximus
Performance |
Timeline |
LG Display |
Maximus |
LG Display and Maximus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Display and Maximus
The main advantage of trading using opposite LG Display and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Maximus 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 Maximus will offset losses from the drop in Maximus' long position.LG Display vs. VOXX International | LG Display vs. Vizio Holding Corp | LG Display vs. Turtle Beach Corp | LG Display vs. Emerson Radio |
Maximus vs. First Advantage Corp | Maximus vs. Rentokil Initial PLC | Maximus vs. CBIZ Inc | Maximus vs. Civeo Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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