Correlation Between Light Wonder and Empire Global

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

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

Diversification Opportunities for Light Wonder and Empire Global

0.57

Correlation Coefficient

Light Wonder  Empire Global

Very weak diversification

The 3 months correlation between Light and Empire is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Empire Global Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Global Gaming 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 Empire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Global Gaming has no effect on the direction of Light Wonder i.e., Light Wonder and Empire Global go up and down completely randomly.

Pair Corralation between Light Wonder and Empire Global

Considering the 90-day investment horizon Light Wonder is expected to generate 0.21 times more return on investment than Empire Global. However, Light Wonder is 4.72 times less risky than Empire Global. It trades about -0.07 of its potential returns per unit of risk. Empire Global Gaming is currently generating about -0.17 per unit of risk. If you would invest  11,048  in Light Wonder on September 12, 2024 and sell it today you would lose (1,734) from holding Light Wonder or give up 15.7% of portfolio value over 90 days.

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

Light Wonder  vs.  Empire Global Gaming

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.

Empire Global Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Light Wonder and Empire Global

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

The idea behind Light Wonder and Empire Global Gaming 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.