Correlation Between Lightspeed Commerce and Air Canada

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

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

Diversification Opportunities for Lightspeed Commerce and Air Canada

0.84

Correlation Coefficient

Lightspeed Commerce  Air Canada

Very poor diversification

The 3 months correlation between Lightspeed and Air is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and Air Canada go up and down completely randomly.

Pair Corralation between Lightspeed Commerce and Air Canada

Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 1.21 times less return on investment than Air Canada. In addition to that, Lightspeed Commerce is 1.02 times more volatile than Air Canada. It trades about 0.27 of its total potential returns per unit of risk. Air Canada is currently generating about 0.33 per unit of volatility. If you would invest  1,521  in Air Canada on September 2, 2024 and sell it today you would earn a total of  975.00  from holding Air Canada or generate 64.1% return on investment over 90 days.

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

Lightspeed Commerce  vs.  Air Canada

Lightspeed Commerce

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lightspeed Commerce are ranked lower than 20 (%) 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.

Air Canada

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Air Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lightspeed Commerce and Air Canada

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

The idea behind Lightspeed Commerce and Air Canada 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.