Correlation Between Vivid Seats and Locafy

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

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

Diversification Opportunities for Vivid Seats and Locafy

0.58

Correlation Coefficient

Vivid Seats  Locafy

Very weak diversification

The 3 months correlation between Vivid and Locafy is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vivid Seats and Locafy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy and Vivid Seats 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 Vivid Seats are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy has no effect on the direction of Vivid Seats i.e., Vivid Seats and Locafy go up and down completely randomly.

Pair Corralation between Vivid Seats and Locafy

Given the investment horizon of 90 days Vivid Seats is expected to under-perform the Locafy. But the stock apears to be less risky and, when comparing its historical volatility, Vivid Seats is 2.91 times less risky than Locafy. The stock trades about -0.01 of its potential returns per unit of risk. The Locafy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Locafy on December 4, 2024 and sell it today you would lose (265.00) from holding Locafy or give up 28.65% of portfolio value over 90 days.

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

Vivid Seats  vs.  Locafy

Vivid Seats

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivid Seats are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vivid Seats unveiled solid returns over the last few months and may actually be approaching a breakup point.

Locafy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Locafy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Locafy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vivid Seats and Locafy

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

The idea behind Vivid Seats and Locafy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.