Correlation Between Light Wonder and Lottery, Warrants

Can any of the company-specific risk be diversified away by investing in both Light Wonder and Lottery, Warrants 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 Light Wonder and Lottery, Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Light Wonder and Lottery, Warrants, you can compare the effects of market volatilities on Light Wonder and Lottery, Warrants 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 Light Wonder with a short position of Lottery, Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Lottery, Warrants.

Diversification Opportunities for Light Wonder and Lottery, Warrants

0.05

Correlation Coefficient

Light Wonder  Lottery, Warrants

Significant diversification

The 3 months correlation between Light and Lottery, is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Lottery, Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lottery, Warrants and Light Wonder 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 Light Wonder are associated (or correlated) with Lottery, Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lottery, Warrants has no effect on the direction of Light Wonder i.e., Light Wonder and Lottery, Warrants go up and down completely randomly.

Pair Corralation between Light Wonder and Lottery, Warrants

Considering the 90-day investment horizon Light Wonder is expected to under-perform the Lottery, Warrants. But the stock apears to be less risky and, when comparing its historical volatility, Light Wonder is 3.66 times less risky than Lottery, Warrants. The stock trades about -0.11 of its potential returns per unit of risk. The Lottery, Warrants is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.97  in Lottery, Warrants on September 20, 2024 and sell it today you would lose (0.28) from holding Lottery, Warrants or give up 28.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Light Wonder  vs.  Lottery, Warrants

Light Wonder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Light Wonder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lottery, Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lottery, Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Lottery, Warrants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Light Wonder and Lottery, Warrants

The main advantage of trading using opposite Light Wonder and Lottery, Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Lottery, Warrants 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 Lottery, Warrants will offset losses from the drop in Lottery, Warrants' long position.

The idea behind Light Wonder and Lottery, Warrants 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.