Correlation Between Liquidity Services and LightInTheBox Holding
Can any of the company-specific risk be diversified away by investing in both Liquidity Services and LightInTheBox Holding 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 Liquidity Services and LightInTheBox Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liquidity Services and LightInTheBox Holding Co, you can compare the effects of market volatilities on Liquidity Services and LightInTheBox Holding 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 Liquidity Services with a short position of LightInTheBox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and LightInTheBox Holding.
Diversification Opportunities for Liquidity Services and LightInTheBox Holding
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liquidity and LightInTheBox is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and LightInTheBox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightInTheBox Holding and Liquidity Services 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 Liquidity Services are associated (or correlated) with LightInTheBox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightInTheBox Holding has no effect on the direction of Liquidity Services i.e., Liquidity Services and LightInTheBox Holding go up and down completely randomly.
Pair Corralation between Liquidity Services and LightInTheBox Holding
Given the investment horizon of 90 days Liquidity Services is expected to under-perform the LightInTheBox Holding. But the stock apears to be less risky and, when comparing its historical volatility, Liquidity Services is 4.74 times less risky than LightInTheBox Holding. The stock trades about -0.18 of its potential returns per unit of risk. The LightInTheBox Holding Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 77.00 in LightInTheBox Holding Co on January 20, 2024 and sell it today you would earn a total of 1.00 from holding LightInTheBox Holding Co or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liquidity Services vs. LightInTheBox Holding Co
Performance |
| Timeline |
| Liquidity Services |
| LightInTheBox Holding |
Liquidity Services and LightInTheBox Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liquidity Services and LightInTheBox Holding
The main advantage of trading using opposite Liquidity Services and LightInTheBox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services position performs unexpectedly, LightInTheBox Holding 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 LightInTheBox Holding will offset losses from the drop in LightInTheBox Holding's long position.| Liquidity Services vs. Shoe Carnival | Liquidity Services vs. Hibbett Sports | Liquidity Services vs. Citi Trends | Liquidity Services vs. Zumiez Inc |
| LightInTheBox Holding vs. Shoe Carnival | LightInTheBox Holding vs. Hibbett Sports | LightInTheBox Holding vs. Citi Trends | LightInTheBox Holding vs. Zumiez Inc |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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