Correlation Between Light Wonder and Jaguar Animal

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

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

Diversification Opportunities for Light Wonder and Jaguar Animal

-0.29

Correlation Coefficient

Light Wonder  Jaguar Animal

Very good diversification

The 3 months correlation between Light and Jaguar is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Jaguar Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Animal Health and Light Wonder 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 Light Wonder are associated (or correlated) with Jaguar Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Animal Health has no effect on the direction of Light Wonder i.e., Light Wonder and Jaguar Animal go up and down completely randomly.

Pair Corralation between Light Wonder and Jaguar Animal

Considering the 90-day investment horizon Light Wonder is expected to generate 42.39 times less return on investment than Jaguar Animal. But when comparing it to its historical volatility, Light Wonder is 7.69 times less risky than Jaguar Animal. It trades about 0.03 of its potential returns per unit of risk. Jaguar Animal Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8.94  in Jaguar Animal Health on February 11, 2024 and sell it today you would earn a total of  20.06  from holding Jaguar Animal Health or generate 224.38% return on investment over 90 days.

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

Light Wonder  vs.  Jaguar Animal Health

Light Wonder

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Light Wonder are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Light Wonder is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jaguar Animal Health

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jaguar Animal Health are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jaguar Animal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Light Wonder and Jaguar Animal

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

The idea behind Light Wonder and Jaguar Animal Health 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.