Correlation Between Light Wonder and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Rave Restaurant 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 Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Rave Restaurant Group, you can compare the effects of market volatilities on Light Wonder and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Rave Restaurant.
Diversification Opportunities for Light Wonder and Rave Restaurant
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Light and Rave is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Light Wonder i.e., Light Wonder and Rave Restaurant go up and down completely randomly.
Pair Corralation between Light Wonder and Rave Restaurant
Considering the 90-day investment horizon Light Wonder is expected to generate 0.9 times more return on investment than Rave Restaurant. However, Light Wonder is 1.11 times less risky than Rave Restaurant. It trades about 0.06 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.02 per unit of risk. If you would invest 9,569 in Light Wonder on August 28, 2024 and sell it today you would earn a total of 276.00 from holding Light Wonder or generate 2.88% 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. Rave Restaurant Group
Performance |
| Timeline |
| Light Wonder |
| Rave Restaurant Group |
Light Wonder and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Rave Restaurant
The main advantage of trading using opposite Light Wonder and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant'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 |
| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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