Correlation Between Workiva and LYFT
Can any of the company-specific risk be diversified away by investing in both Workiva 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 Workiva and LYFT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and LYFT Inc, you can compare the effects of market volatilities on Workiva 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 Workiva with a short position of LYFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and LYFT.
Diversification Opportunities for Workiva and LYFT
Almost no diversification
The 3 months correlation between Workiva and LYFT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and LYFT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYFT Inc and Workiva 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 Workiva 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 Workiva i.e., Workiva and LYFT go up and down completely randomly.
Pair Corralation between Workiva and LYFT
Allowing for the 90-day total investment horizon Workiva is expected to generate 1.34 times less return on investment than LYFT. But when comparing it to its historical volatility, Workiva is 2.53 times less risky than LYFT. It trades about 0.45 of its potential returns per unit of risk. LYFT Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,348 in LYFT Inc on September 2, 2024 and sell it today you would earn a total of 388.00 from holding LYFT Inc or generate 28.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workiva vs. LYFT Inc
Performance |
| Timeline |
| Workiva |
| LYFT Inc |
Workiva and LYFT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workiva and LYFT
The main advantage of trading using opposite Workiva and LYFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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.The idea behind Workiva and LYFT Inc 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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