Correlation Between KYN Capital and LM Funding

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

By analyzing existing cross correlation between KYN Capital Group and LM Funding America, you can compare the effects of market volatilities on KYN Capital and LM Funding 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 KYN Capital with a short position of LM Funding. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYN Capital and LM Funding.

Diversification Opportunities for KYN Capital and LM Funding

-0.35

Correlation Coefficient

KYN Capital  LM Funding

Very good diversification

The 3 months correlation between KYN and LMFA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KYN Capital Group and LM Funding America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LM Funding America and KYN Capital 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 KYN Capital Group are associated (or correlated) with LM Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LM Funding America has no effect on the direction of KYN Capital i.e., KYN Capital and LM Funding go up and down completely randomly.

Pair Corralation between KYN Capital and LM Funding

Given the investment horizon of 90 days KYN Capital is expected to generate 6.65 times less return on investment than LM Funding. In addition to that, KYN Capital is 1.64 times more volatile than LM Funding America. It trades about 0.01 of its total potential returns per unit of risk. LM Funding America is currently generating about 0.07 per unit of volatility. If you would invest  243.00  in LM Funding America on September 12, 2024 and sell it today you would earn a total of  47.00  from holding LM Funding America or generate 19.34% return on investment over 90 days.

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

KYN Capital Group  vs.  LM Funding America

KYN Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

LM Funding America

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LM Funding America are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile technical and fundamental indicators, LM Funding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KYN Capital and LM Funding

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

The idea behind KYN Capital Group and LM Funding America 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.