Correlation Between Spirent Communications and Light Science
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Light Science 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 Spirent Communications and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Light Science Technologies, you can compare the effects of market volatilities on Spirent Communications and Light Science 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 Spirent Communications with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Light Science.
Diversification Opportunities for Spirent Communications and Light Science
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and Light is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Spirent Communications i.e., Spirent Communications and Light Science go up and down completely randomly.
Pair Corralation between Spirent Communications and Light Science
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.27 times more return on investment than Light Science. However, Spirent Communications plc is 3.73 times less risky than Light Science. It trades about -0.16 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.05 per unit of risk. If you would invest 18,030 in Spirent Communications plc on October 11, 2024 and sell it today you would lose (450.00) from holding Spirent Communications plc or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Light Science Technologies
Performance |
| Timeline |
| Spirent Communications |
| Light Science Techno |
Spirent Communications and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Light Science
The main advantage of trading using opposite Spirent Communications and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Spirent Communications vs. Axway Software SA | Spirent Communications vs. Take Two Interactive Software | Spirent Communications vs. Mobius Investment Trust | Spirent Communications vs. Oxford Technology 2 |
| Light Science vs. Capital Drilling | Light Science vs. Aeorema Communications Plc | Light Science vs. Spirent Communications plc | Light Science vs. Zoom Video Communications |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |