Correlation Between PowerUp Acquisition and LPL Financial

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

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

Diversification Opportunities for PowerUp Acquisition and LPL Financial

-0.43

Correlation Coefficient

PowerUp Acquisition  LPL Financial

Very good diversification

The 3 months correlation between PowerUp and LPL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PowerUp Acquisition Corp 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 PowerUp Acquisition 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 PowerUp Acquisition Corp 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 PowerUp Acquisition i.e., PowerUp Acquisition and LPL Financial go up and down completely randomly.

Pair Corralation between PowerUp Acquisition and LPL Financial

Assuming the 90 days horizon PowerUp Acquisition Corp is expected to under-perform the LPL Financial. In addition to that, PowerUp Acquisition is 10.22 times more volatile than LPL Financial Holdings. It trades about -0.06 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.3 per unit of volatility. If you would invest  21,950  in LPL Financial Holdings on September 3, 2024 and sell it today you would earn a total of  10,565  from holding LPL Financial Holdings or generate 48.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

PowerUp Acquisition Corp  vs.  LPL Financial Holdings

PowerUp Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerUp Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

LPL Financial Holdings

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PowerUp Acquisition and LPL Financial

The main advantage of trading using opposite PowerUp Acquisition and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PowerUp Acquisition 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 PowerUp Acquisition Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.