Correlation Between Workday and Lyft
Can any of the company-specific risk be diversified away by investing in both Workday and Lyft 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 Workday and Lyft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workday and Lyft Inc, you can compare the effects of market volatilities on Workday and Lyft 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 Workday with a short position of Lyft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workday and Lyft.
Diversification Opportunities for Workday and Lyft
Poor diversification
The 3 months correlation between Workday and Lyft is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Lyft Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyft Inc and Workday 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 Workday are associated (or correlated) with Lyft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyft Inc has no effect on the direction of Workday i.e., Workday and Lyft go up and down completely randomly.
Pair Corralation between Workday and Lyft
Assuming the 90 days horizon Workday is expected to generate 3.41 times less return on investment than Lyft. But when comparing it to its historical volatility, Workday is 2.06 times less risky than Lyft. It trades about 0.12 of its potential returns per unit of risk. Lyft Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Lyft Inc on August 30, 2024 and sell it today you would earn a total of 505.00 from holding Lyft Inc or generate 44.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workday vs. Lyft Inc
Performance |
| Timeline |
| Workday |
| Lyft Inc |
Workday and Lyft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workday and Lyft
The main advantage of trading using opposite Workday and Lyft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday position performs unexpectedly, Lyft 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 Lyft will offset losses from the drop in Lyft's long position.| Workday vs. Superior Plus Corp | Workday vs. SIVERS SEMICONDUCTORS AB | Workday vs. Talanx AG | Workday vs. 2G ENERGY |
| Lyft vs. MGIC INVESTMENT | Lyft vs. SANOK RUBBER ZY | Lyft vs. Hyster Yale Materials Handling | Lyft vs. Virtus Investment Partners |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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