Correlation Between Lightspeed Commerce and Aritzia

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

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

Diversification Opportunities for Lightspeed Commerce and Aritzia

-0.07

Correlation Coefficient

Lightspeed Commerce  Aritzia

Good diversification

The 3 months correlation between Lightspeed and Aritzia is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Lightspeed Commerce 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 Lightspeed Commerce are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and Aritzia go up and down completely randomly.

Pair Corralation between Lightspeed Commerce and Aritzia

Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 1.22 times more return on investment than Aritzia. However, Lightspeed Commerce is 1.22 times more volatile than Aritzia. It trades about 0.22 of its potential returns per unit of risk. Aritzia is currently generating about 0.06 per unit of risk. If you would invest  1,702  in Lightspeed Commerce on September 5, 2024 and sell it today you would earn a total of  741.00  from holding Lightspeed Commerce or generate 43.54% return on investment over 90 days.

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

Lightspeed Commerce  vs.  Aritzia

Lightspeed Commerce

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lightspeed Commerce are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lightspeed Commerce displayed solid returns over the last few months and may actually be approaching a breakup point.

Aritzia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lightspeed Commerce and Aritzia

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

The idea behind Lightspeed Commerce and Aritzia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..