Correlation Between LYFT and Freight Technologies
Can any of the company-specific risk be diversified away by investing in both LYFT and Freight Technologies 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 LYFT and Freight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYFT Inc and Freight Technologies, you can compare the effects of market volatilities on LYFT and Freight Technologies 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 LYFT with a short position of Freight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYFT and Freight Technologies.
Diversification Opportunities for LYFT and Freight Technologies
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LYFT and Freight is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and Freight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freight Technologies and LYFT 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 LYFT Inc are associated (or correlated) with Freight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freight Technologies has no effect on the direction of LYFT i.e., LYFT and Freight Technologies go up and down completely randomly.
Pair Corralation between LYFT and Freight Technologies
Given the investment horizon of 90 days LYFT Inc is expected to generate 0.5 times more return on investment than Freight Technologies. However, LYFT Inc is 2.02 times less risky than Freight Technologies. It trades about 0.04 of its potential returns per unit of risk. Freight Technologies is currently generating about -0.1 per unit of risk. If you would invest 1,160 in LYFT Inc on September 3, 2024 and sell it today you would earn a total of 576.00 from holding LYFT Inc or generate 49.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LYFT Inc vs. Freight Technologies
Performance |
| Timeline |
| LYFT Inc |
| Freight Technologies |
LYFT and Freight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYFT and Freight Technologies
The main advantage of trading using opposite LYFT and Freight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT position performs unexpectedly, Freight Technologies 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 Freight Technologies will offset losses from the drop in Freight Technologies' long position.The idea behind LYFT Inc and Freight Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Freight Technologies vs. Salesforce | Freight Technologies vs. Workday | Freight Technologies vs. Unity Software |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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