Correlation Between Drone Delivery and Lightspeed Commerce

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

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

Diversification Opportunities for Drone Delivery and Lightspeed Commerce

0.23

Correlation Coefficient

Drone Delivery  Lightspeed Commerce

Modest diversification

The 3 months correlation between Drone and Lightspeed is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Drone Delivery Canada and Lightspeed Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightspeed Commerce and Drone Delivery 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 Drone Delivery Canada are associated (or correlated) with Lightspeed Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightspeed Commerce has no effect on the direction of Drone Delivery i.e., Drone Delivery and Lightspeed Commerce go up and down completely randomly.

Pair Corralation between Drone Delivery and Lightspeed Commerce

Assuming the 90 days horizon Drone Delivery Canada is expected to generate 2.2 times more return on investment than Lightspeed Commerce. However, Drone Delivery is 2.2 times more volatile than Lightspeed Commerce. It trades about 0.09 of its potential returns per unit of risk. Lightspeed Commerce is currently generating about -0.29 per unit of risk. If you would invest  14.00  in Drone Delivery Canada on December 31, 2024 and sell it today you would earn a total of  4.00  from holding Drone Delivery Canada or generate 28.57% return on investment over 90 days.

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

Drone Delivery Canada  vs.  Lightspeed Commerce

Drone Delivery Canada

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Drone Delivery Canada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Drone Delivery showed solid returns over the last few months and may actually be approaching a breakup point.

Lightspeed Commerce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lightspeed Commerce 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 very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Drone Delivery and Lightspeed Commerce

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

The idea behind Drone Delivery Canada and Lightspeed Commerce 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.