Correlation Between Light Wonder and Carnival
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Carnival 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 Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Carnival, you can compare the effects of market volatilities on Light Wonder and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Carnival.
Diversification Opportunities for Light Wonder and Carnival
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Light and Carnival is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Light Wonder i.e., Light Wonder and Carnival go up and down completely randomly.
Pair Corralation between Light Wonder and Carnival
Considering the 90-day investment horizon Light Wonder is expected to generate 3.52 times less return on investment than Carnival. In addition to that, Light Wonder is 1.27 times more volatile than Carnival. It trades about 0.06 of its total potential returns per unit of risk. Carnival is currently generating about 0.29 per unit of volatility. If you would invest 2,216 in Carnival on August 31, 2024 and sell it today you would earn a total of 298.00 from holding Carnival or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Wonder vs. Carnival
Performance |
| Timeline |
| Light Wonder |
| Carnival |
Light Wonder and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Carnival
The main advantage of trading using opposite Light Wonder and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| Light Wonder vs. Codere Online Corp | Light Wonder vs. Inspired Entertainment | Light Wonder vs. International Game Technology | Light Wonder vs. Accel Entertainment |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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