Correlation Between Lightspeed Commerce and WELL Health
Can any of the company-specific risk be diversified away by investing in both Lightspeed Commerce and WELL Health 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 WELL Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lightspeed Commerce and WELL Health Technologies, you can compare the effects of market volatilities on Lightspeed Commerce and WELL Health 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 WELL Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightspeed Commerce and WELL Health.
Diversification Opportunities for Lightspeed Commerce and WELL Health
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lightspeed and WELL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and WELL Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELL Health Technologies 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 WELL Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELL Health Technologies has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and WELL Health go up and down completely randomly.
Pair Corralation between Lightspeed Commerce and WELL Health
Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 0.65 times more return on investment than WELL Health. However, Lightspeed Commerce is 1.54 times less risky than WELL Health. It trades about 0.46 of its potential returns per unit of risk. WELL Health Technologies is currently generating about 0.28 per unit of risk. If you would invest 2,075 in Lightspeed Commerce on August 28, 2024 and sell it today you would earn a total of 491.00 from holding Lightspeed Commerce or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lightspeed Commerce vs. WELL Health Technologies
Performance |
| Timeline |
| Lightspeed Commerce |
| WELL Health Technologies |
Lightspeed Commerce and WELL Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lightspeed Commerce and WELL Health
The main advantage of trading using opposite Lightspeed Commerce and WELL Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightspeed Commerce position performs unexpectedly, WELL Health 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 WELL Health will offset losses from the drop in WELL Health's long position.| Lightspeed Commerce vs. Slate Grocery REIT | Lightspeed Commerce vs. Roots Corp | Lightspeed Commerce vs. Aimia Inc | Lightspeed Commerce vs. Tucows 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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