Correlation Between Lightspeed Commerce and Air Canada
Can any of the company-specific risk be diversified away by investing in both Lightspeed Commerce and Air Canada 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 Lightspeed Commerce and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lightspeed Commerce and Air Canada, you can compare the effects of market volatilities on Lightspeed Commerce and Air Canada 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 Lightspeed Commerce with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightspeed Commerce and Air Canada.
Diversification Opportunities for Lightspeed Commerce and Air Canada
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lightspeed and Air is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Lightspeed Commerce 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 Lightspeed Commerce are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and Air Canada go up and down completely randomly.
Pair Corralation between Lightspeed Commerce and Air Canada
Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 1.6 times more return on investment than Air Canada. However, Lightspeed Commerce is 1.6 times more volatile than Air Canada. It trades about 0.06 of its potential returns per unit of risk. Air Canada is currently generating about 0.08 per unit of risk. If you would invest 1,731 in Lightspeed Commerce on August 26, 2024 and sell it today you would earn a total of 749.00 from holding Lightspeed Commerce or generate 43.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lightspeed Commerce vs. Air Canada
Performance |
| Timeline |
| Lightspeed Commerce |
| Air Canada |
Lightspeed Commerce and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lightspeed Commerce and Air Canada
The main advantage of trading using opposite Lightspeed Commerce and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightspeed Commerce position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Lightspeed Commerce vs. Shopify | Lightspeed Commerce vs. WELL Health Technologies | Lightspeed Commerce vs. BlackBerry | Lightspeed Commerce vs. Docebo Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
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| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |