Correlation Between Northview Residential and Lightspeed Commerce

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

By analyzing existing cross correlation between Northview Residential REIT and Lightspeed Commerce, you can compare the effects of market volatilities on Northview Residential and Lightspeed Commerce 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 Northview Residential with a short position of Lightspeed Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northview Residential and Lightspeed Commerce.

Diversification Opportunities for Northview Residential and Lightspeed Commerce

-0.54

Correlation Coefficient

Northview Residential  Lightspeed Commerce

Excellent diversification

The 3 months correlation between Northview and Lightspeed is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Northview Residential REIT and Lightspeed Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightspeed Commerce and Northview Residential 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 Northview Residential REIT are associated (or correlated) with Lightspeed Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightspeed Commerce has no effect on the direction of Northview Residential i.e., Northview Residential and Lightspeed Commerce go up and down completely randomly.

Pair Corralation between Northview Residential and Lightspeed Commerce

Assuming the 90 days trading horizon Northview Residential REIT is expected to under-perform the Lightspeed Commerce. But the stock apears to be less risky and, when comparing its historical volatility, Northview Residential REIT is 1.97 times less risky than Lightspeed Commerce. The stock trades about -0.29 of its potential returns per unit of risk. The Lightspeed Commerce is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,424  in Lightspeed Commerce on October 9, 2024 and sell it today you would lose (103.00) from holding Lightspeed Commerce or give up 4.25% of portfolio value over 90 days.

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

Northview Residential REIT  vs.  Lightspeed Commerce

Northview Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northview Residential REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lightspeed Commerce

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lightspeed Commerce are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lightspeed Commerce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Northview Residential and Lightspeed Commerce

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

The idea behind Northview Residential REIT and Lightspeed Commerce 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.