Correlation Between Lightspeed Commerce and IShares Fundamental

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

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

Diversification Opportunities for Lightspeed Commerce and IShares Fundamental

0.92

Correlation Coefficient

Lightspeed Commerce  IShares Fundamental

Almost no diversification

The 3 months correlation between Lightspeed and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and iShares Fundamental Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fundamental 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 IShares Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fundamental has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and IShares Fundamental go up and down completely randomly.

Pair Corralation between Lightspeed Commerce and IShares Fundamental

Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 2.74 times more return on investment than IShares Fundamental. However, Lightspeed Commerce is 2.74 times more volatile than iShares Fundamental Hedged. It trades about 0.48 of its potential returns per unit of risk. iShares Fundamental Hedged is currently generating about 0.35 per unit of risk. If you would invest  2,101  in Lightspeed Commerce on September 3, 2024 and sell it today you would earn a total of  524.00  from holding Lightspeed Commerce or generate 24.94% return on investment over 90 days.

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

Lightspeed Commerce  vs.  iShares Fundamental Hedged

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.

iShares Fundamental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lightspeed Commerce and IShares Fundamental

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

The idea behind Lightspeed Commerce and iShares Fundamental Hedged 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.