Correlation Between LYFT and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both LYFT and Shoprite Holdings 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 Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYFT Inc and Shoprite Holdings Limited, you can compare the effects of market volatilities on LYFT and Shoprite Holdings 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 Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYFT and Shoprite Holdings.
Diversification Opportunities for LYFT and Shoprite Holdings
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LYFT and Shoprite is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings 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 Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of LYFT i.e., LYFT and Shoprite Holdings go up and down completely randomly.
Pair Corralation between LYFT and Shoprite Holdings
Given the investment horizon of 90 days LYFT Inc is expected to generate 2.87 times more return on investment than Shoprite Holdings. However, LYFT is 2.87 times more volatile than Shoprite Holdings Limited. It trades about 0.04 of its potential returns per unit of risk. Shoprite Holdings Limited is currently generating about 0.07 per unit of risk. If you would invest 1,314 in LYFT Inc on August 27, 2024 and sell it today you would earn a total of 365.00 from holding LYFT Inc or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 46.37% |
| Values | Daily Returns |
LYFT Inc vs. Shoprite Holdings Limited
Performance |
| Timeline |
| LYFT Inc |
| Shoprite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
LYFT and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYFT and Shoprite Holdings
The main advantage of trading using opposite LYFT and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT position performs unexpectedly, Shoprite Holdings 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 Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.The idea behind LYFT Inc and Shoprite Holdings Limited 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.| Shoprite Holdings vs. Weibo Corp | Shoprite Holdings vs. Beyond Meat | Shoprite Holdings vs. NH Foods Ltd | Shoprite Holdings vs. FitLife Brands, Common |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |