Correlation Between Light Wonder and Everi Holdings

Can any of the company-specific risk be diversified away by investing in both Light Wonder and Everi 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 Everi 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 Everi Holdings, you can compare the effects of market volatilities on Light Wonder and Everi 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 Everi Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Everi Holdings.

Diversification Opportunities for Light Wonder and Everi Holdings

0.65

Correlation Coefficient

Light Wonder  Everi Holdings

Poor diversification

The 3 months correlation between Light and Everi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Everi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everi 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 Everi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everi Holdings has no effect on the direction of Light Wonder i.e., Light Wonder and Everi Holdings go up and down completely randomly.

Pair Corralation between Light Wonder and Everi Holdings

Considering the 90-day investment horizon Light Wonder is expected to generate 12.5 times more return on investment than Everi Holdings. However, Light Wonder is 12.5 times more volatile than Everi Holdings. It trades about 0.11 of its potential returns per unit of risk. Everi Holdings is currently generating about 0.08 per unit of risk. If you would invest  8,522  in Light Wonder on December 28, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Light Wonder  vs.  Everi Holdings

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.

Everi Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Light Wonder and Everi Holdings

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

The idea behind Light Wonder and Everi 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.