Correlation Between Esports Entertainment and Light Wonder
Can any of the company-specific risk be diversified away by investing in both Esports Entertainment 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 Esports Entertainment and Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esports Entertainment Group and Light Wonder, you can compare the effects of market volatilities on Esports Entertainment 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 Esports Entertainment with a short position of Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esports Entertainment and Light Wonder.
Diversification Opportunities for Esports Entertainment and Light Wonder
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Esports and Light is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Esports Entertainment Group and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder and Esports Entertainment 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 Esports Entertainment 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 Esports Entertainment i.e., Esports Entertainment and Light Wonder go up and down completely randomly.
Pair Corralation between Esports Entertainment and Light Wonder
Given the investment horizon of 90 days Esports Entertainment Group is expected to under-perform the Light Wonder. In addition to that, Esports Entertainment is 4.94 times more volatile than Light Wonder. It trades about -0.14 of its total potential returns per unit of risk. Light Wonder is currently generating about 0.06 per unit of volatility. If you would invest 5,938 in Light Wonder on August 28, 2024 and sell it today you would earn a total of 3,907 from holding Light Wonder or generate 65.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.78% |
| Values | Daily Returns |
Esports Entertainment Group vs. Light Wonder
Performance |
| Timeline |
| Esports Entertainment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Light Wonder |
Esports Entertainment and Light Wonder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esports Entertainment and Light Wonder
The main advantage of trading using opposite Esports Entertainment and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esports Entertainment 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.| Esports Entertainment vs. Rush Street Interactive | Esports Entertainment vs. Everi Holdings | Esports Entertainment vs. Inspired Entertainment | Esports Entertainment vs. PointsBet Holdings Limited |
| Light Wonder vs. Codere Online Corp | Light Wonder vs. Inspired Entertainment | Light Wonder vs. International Game Technology | Light Wonder vs. Accel Entertainment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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