Correlation Between Light Wonder and Red Robin
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Red Robin 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 Red Robin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Red Robin Gourmet, you can compare the effects of market volatilities on Light Wonder and Red Robin 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 Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Red Robin.
Diversification Opportunities for Light Wonder and Red Robin
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Light and Red is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet 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 Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Light Wonder i.e., Light Wonder and Red Robin go up and down completely randomly.
Pair Corralation between Light Wonder and Red Robin
Considering the 90-day investment horizon Light Wonder is expected to generate 0.51 times more return on investment than Red Robin. However, Light Wonder is 1.97 times less risky than Red Robin. It trades about 0.05 of its potential returns per unit of risk. Red Robin Gourmet is currently generating about 0.0 per unit of risk. If you would invest 6,187 in Light Wonder on August 28, 2024 and sell it today you would earn a total of 3,607 from holding Light Wonder or generate 58.3% 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. Red Robin Gourmet
Performance |
| Timeline |
| Light Wonder |
| Red Robin Gourmet |
Light Wonder and Red Robin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Red Robin
The main advantage of trading using opposite Light Wonder and Red Robin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Red Robin 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 Red Robin will offset losses from the drop in Red Robin'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 |
| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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