Correlation Between Light Wonder and Aurizon Holdings
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Aurizon Holdings 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 Light Wonder and Aurizon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Aurizon Holdings, you can compare the effects of market volatilities on Light Wonder and Aurizon Holdings 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 Light Wonder with a short position of Aurizon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Aurizon Holdings.
Diversification Opportunities for Light Wonder and Aurizon Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Light and Aurizon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Aurizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurizon Holdings and Light Wonder 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 Light Wonder are associated (or correlated) with Aurizon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurizon Holdings has no effect on the direction of Light Wonder i.e., Light Wonder and Aurizon Holdings go up and down completely randomly.
Pair Corralation between Light Wonder and Aurizon Holdings
Assuming the 90 days trading horizon Light Wonder is expected to under-perform the Aurizon Holdings. In addition to that, Light Wonder is 3.68 times more volatile than Aurizon Holdings. It trades about -0.02 of its total potential returns per unit of risk. Aurizon Holdings is currently generating about 0.06 per unit of volatility. If you would invest 332.00 in Aurizon Holdings on August 28, 2024 and sell it today you would earn a total of 10.00 from holding Aurizon Holdings or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Wonder vs. Aurizon Holdings
Performance |
| Timeline |
| Light Wonder |
| Aurizon Holdings |
Light Wonder and Aurizon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Aurizon Holdings
The main advantage of trading using opposite Light Wonder and Aurizon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Aurizon Holdings 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 Aurizon Holdings will offset losses from the drop in Aurizon Holdings' long position.| Light Wonder vs. Lottery | Light Wonder vs. Pointsbet Holdings | Light Wonder vs. Bluebet Holdings | Light Wonder vs. Betmakers Technology Group |
| Aurizon Holdings vs. Macquarie Group | Aurizon Holdings vs. Rio Tinto | Aurizon Holdings vs. CSL | Aurizon Holdings vs. Commonwealth Bank of |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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