Correlation Between Light Wonder and Canterbury Park

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

By analyzing existing cross correlation between Light Wonder and Canterbury Park Holding, you can compare the effects of market volatilities on Light Wonder and Canterbury Park 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 Canterbury Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Canterbury Park.

Diversification Opportunities for Light Wonder and Canterbury Park

-0.51

Correlation Coefficient

Light Wonder  Canterbury Park

Excellent diversification

The 3 months correlation between Light and Canterbury is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Canterbury Park Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canterbury Park Holding 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 Canterbury Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canterbury Park Holding has no effect on the direction of Light Wonder i.e., Light Wonder and Canterbury Park go up and down completely randomly.

Pair Corralation between Light Wonder and Canterbury Park

Considering the 90-day investment horizon Light Wonder is expected to generate 1.38 times more return on investment than Canterbury Park. However, Light Wonder is 1.38 times more volatile than Canterbury Park Holding. It trades about 0.11 of its potential returns per unit of risk. Canterbury Park Holding is currently generating about -0.11 per unit of risk. If you would invest  8,522  in Light Wonder on December 29, 2024 and sell it today you would earn a total of  1,414  from holding Light Wonder or generate 16.59% return on investment over 90 days.

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

Light Wonder  vs.  Canterbury Park Holding

Light Wonder

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Light Wonder are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Light Wonder showed solid returns over the last few months and may actually be approaching a breakup point.

Canterbury Park Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canterbury Park Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Light Wonder and Canterbury Park

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

The idea behind Light Wonder and Canterbury Park Holding 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.