Correlation Between METISA Metalrgica and LPL Financial

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

By analyzing existing cross correlation between METISA Metalrgica Timboense and LPL Financial Holdings, you can compare the effects of market volatilities on METISA Metalrgica and LPL Financial 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 METISA Metalrgica with a short position of LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and LPL Financial.

Diversification Opportunities for METISA Metalrgica and LPL Financial

0.47

Correlation Coefficient

METISA Metalrgica  LPL Financial

Very weak diversification

The 3 months correlation between METISA and LPL is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and LPL Financial go up and down completely randomly.

Pair Corralation between METISA Metalrgica and LPL Financial

Assuming the 90 days trading horizon METISA Metalrgica is expected to generate 2.44 times less return on investment than LPL Financial. In addition to that, METISA Metalrgica is 1.07 times more volatile than LPL Financial Holdings. It trades about 0.08 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.22 per unit of volatility. If you would invest  9,583  in LPL Financial Holdings on April 22, 2025 and sell it today you would earn a total of  2,610  from holding LPL Financial Holdings or generate 27.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

METISA Metalrgica Timboense  vs.  LPL Financial Holdings

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

LPL Financial Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METISA Metalrgica and LPL Financial

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

The idea behind METISA Metalrgica Timboense and LPL Financial Holdings 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.