Correlation Between Lmp Automotive and Invesco QQQ

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Can any of the company-specific risk be diversified away by investing in both Lmp Automotive and Invesco QQQ 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 Lmp Automotive and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lmp Automotive Holdings and Invesco QQQ Trust, you can compare the effects of market volatilities on Lmp Automotive and Invesco QQQ 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 Lmp Automotive with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lmp Automotive and Invesco QQQ.

Diversification Opportunities for Lmp Automotive and Invesco QQQ

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Lmp Automotive and Invesco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lmp Automotive Holdings and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust and Lmp Automotive 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 Lmp Automotive Holdings are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Lmp Automotive i.e., Lmp Automotive and Invesco QQQ go up and down completely randomly.

Pair Corralation between Lmp Automotive and Invesco QQQ

Given the investment horizon of 90 days Lmp Automotive Holdings is expected to under-perform the Invesco QQQ. But the stock apears to be less risky and, when comparing its historical volatility, Lmp Automotive Holdings is 1.92 times less risky than Invesco QQQ. The stock trades about -0.22 of its potential returns per unit of risk. The Invesco QQQ Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27,511  in Invesco QQQ Trust on September 2, 2022 and sell it today you would earn a total of  1,825  from holding Invesco QQQ Trust or generate 6.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Lmp Automotive Holdings  vs.  Invesco QQQ Trust

 Performance (%) 
       Timeline  
Lmp Automotive Holdings 
Lmp Automotive Performance
0 of 100
Over the last 90 days Lmp Automotive Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lmp Automotive is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Lmp Automotive Price Channel

Invesco QQQ Trust 
Invesco Performance
0 of 100
Over the last 90 days Invesco QQQ Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco QQQ is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Invesco Price Channel

Lmp Automotive and Invesco QQQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lmp Automotive and Invesco QQQ

The main advantage of trading using opposite Lmp Automotive and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lmp Automotive position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.
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The idea behind Lmp Automotive Holdings and Invesco QQQ Trust 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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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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