Correlation Between FSA and Light Wonder
Can any of the company-specific risk be diversified away by investing in both FSA and Light Wonder 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 FSA and Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Light Wonder, you can compare the effects of market volatilities on FSA and Light Wonder 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 FSA with a short position of Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Light Wonder.
Diversification Opportunities for FSA and Light Wonder
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between FSA and Light is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder and FSA 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 FSA Group are associated (or correlated) with Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of FSA i.e., FSA and Light Wonder go up and down completely randomly.
Pair Corralation between FSA and Light Wonder
Assuming the 90 days trading horizon FSA Group is expected to generate 0.47 times more return on investment than Light Wonder. However, FSA Group is 2.13 times less risky than Light Wonder. It trades about 0.08 of its potential returns per unit of risk. Light Wonder is currently generating about -0.01 per unit of risk. If you would invest 79.00 in FSA Group on October 18, 2024 and sell it today you would earn a total of 2.00 from holding FSA Group or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. Light Wonder
Performance |
| Timeline |
| FSA Group |
| Light Wonder |
FSA and Light Wonder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Light Wonder
The main advantage of trading using opposite FSA and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, Light Wonder 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 Light Wonder will offset losses from the drop in Light Wonder's long position.| FSA vs. Viva Leisure | FSA vs. Chalice Mining Limited | FSA vs. Black Rock Mining | FSA vs. Australian Unity Office |
| Light Wonder vs. Lottery | Light Wonder vs. Pointsbet Holdings | Light Wonder vs. Bluebet Holdings | Light Wonder vs. Betmakers Technology Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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