Correlation Between Light Wonder and Lottery
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Lottery 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 Lottery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Lottery, you can compare the effects of market volatilities on Light Wonder and Lottery 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 Lottery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Lottery.
Diversification Opportunities for Light Wonder and Lottery
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Light and Lottery is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Lottery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lottery 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 Lottery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lottery has no effect on the direction of Light Wonder i.e., Light Wonder and Lottery go up and down completely randomly.
Pair Corralation between Light Wonder and Lottery
Assuming the 90 days trading horizon Light Wonder is expected to generate 2.7 times less return on investment than Lottery. In addition to that, Light Wonder is 2.34 times more volatile than Lottery. It trades about 0.02 of its total potential returns per unit of risk. Lottery is currently generating about 0.16 per unit of volatility. If you would invest 501.00 in Lottery on August 31, 2024 and sell it today you would earn a total of 17.00 from holding Lottery or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Wonder vs. Lottery
Performance |
| Timeline |
| Light Wonder |
| Lottery |
Light Wonder and Lottery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Lottery
The main advantage of trading using opposite Light Wonder and Lottery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Lottery 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 Lottery will offset losses from the drop in Lottery's long position.| Light Wonder vs. Hawsons Iron | Light Wonder vs. Spirit Telecom | Light Wonder vs. TPG Telecom | Light Wonder vs. The Environmental Group |
| Lottery vs. Mayfield Childcare | Lottery vs. The Environmental Group | Lottery vs. Black Rock Mining | Lottery vs. Bisalloy Steel 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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