Correlation Between Deluxe and Global Lights
Can any of the company-specific risk be diversified away by investing in both Deluxe and Global Lights 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 Deluxe and Global Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Global Lights Acquisition, you can compare the effects of market volatilities on Deluxe and Global Lights 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 Deluxe with a short position of Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Global Lights.
Diversification Opportunities for Deluxe and Global Lights
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deluxe and Global is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition and Deluxe 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 Deluxe are associated (or correlated) with Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of Deluxe i.e., Deluxe and Global Lights go up and down completely randomly.
Pair Corralation between Deluxe and Global Lights
Considering the 90-day investment horizon Deluxe is expected to generate 14.87 times more return on investment than Global Lights. However, Deluxe is 14.87 times more volatile than Global Lights Acquisition. It trades about 0.03 of its potential returns per unit of risk. Global Lights Acquisition is currently generating about 0.15 per unit of risk. If you would invest 1,765 in Deluxe on October 27, 2024 and sell it today you would earn a total of 445.00 from holding Deluxe or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.69% |
| Values | Daily Returns |
Deluxe vs. Global Lights Acquisition
Performance |
| Timeline |
| Deluxe |
| Global Lights Acquisition |
Deluxe and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and Global Lights
The main advantage of trading using opposite Deluxe and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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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 the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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