Correlation Between Light Wonder and Pinstripes Holdings

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

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

Diversification Opportunities for Light Wonder and Pinstripes Holdings

0.64

Correlation Coefficient

Light Wonder  Pinstripes Holdings

Poor diversification

The 3 months correlation between Light and Pinstripes is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Light Wonder i.e., Light Wonder and Pinstripes Holdings go up and down completely randomly.

Pair Corralation between Light Wonder and Pinstripes Holdings

Considering the 90-day investment horizon Light Wonder is expected to generate 0.37 times more return on investment than Pinstripes Holdings. However, Light Wonder is 2.71 times less risky than Pinstripes Holdings. It trades about -0.02 of its potential returns per unit of risk. Pinstripes Holdings is currently generating about -0.11 per unit of risk. If you would invest  10,751  in Light Wonder on September 5, 2024 and sell it today you would lose (866.00) from holding Light Wonder or give up 8.06% of portfolio value over 90 days.

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

Light Wonder  vs.  Pinstripes Holdings

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 fairly stable basic indicators, Light Wonder is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pinstripes Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinstripes Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Light Wonder and Pinstripes Holdings

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

The idea behind Light Wonder and Pinstripes Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.