Correlation Between Sun Lif and Lightspeed Commerce

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

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

Diversification Opportunities for Sun Lif and Lightspeed Commerce

-0.44

Correlation Coefficient

Sun Lif  Lightspeed Commerce

Very good diversification

The 3 months correlation between Sun and Lightspeed is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Lightspeed Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightspeed Commerce and Sun Lif 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 Sun Lif Non 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 Sun Lif i.e., Sun Lif and Lightspeed Commerce go up and down completely randomly.

Pair Corralation between Sun Lif and Lightspeed Commerce

Assuming the 90 days trading horizon Sun Lif is expected to generate 5.87 times less return on investment than Lightspeed Commerce. But when comparing it to its historical volatility, Sun Lif Non is 2.86 times less risky than Lightspeed Commerce. It trades about 0.02 of its potential returns per unit of risk. Lightspeed Commerce is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,161  in Lightspeed Commerce on October 7, 2024 and sell it today you would earn a total of  112.00  from holding Lightspeed Commerce or generate 5.18% return on investment over 90 days.

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

Sun Lif Non  vs.  Lightspeed Commerce

Sun Lif Non

Risk-Adjusted Performance

1 of 100

Weak

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

Lightspeed Commerce

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lightspeed Commerce are ranked lower than 3 (%) 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 Sun Lif and Lightspeed Commerce

The main advantage of trading using opposite Sun Lif and Lightspeed Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif 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 Sun Lif Non 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..