Correlation Between Accel Entertainment and Light Wonder

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Can any of the company-specific risk be diversified away by investing in both Accel Entertainment and Light Wonder 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 Accel Entertainment and Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accel Entertainment and Light Wonder, you can compare the effects of market volatilities on Accel Entertainment and Light Wonder 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 Accel Entertainment with a short position of Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accel Entertainment and Light Wonder.

Diversification Opportunities for Accel Entertainment and Light Wonder

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Accel and Light is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Accel Entertainment and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder and Accel Entertainment 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 Accel Entertainment are associated (or correlated) with Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Accel Entertainment i.e., Accel Entertainment and Light Wonder go up and down completely randomly.

Pair Corralation between Accel Entertainment and Light Wonder

Given the investment horizon of 90 days Accel Entertainment is expected to generate 1.06 times more return on investment than Light Wonder. However, Accel Entertainment is 1.06 times more volatile than Light Wonder. It trades about 0.02 of its potential returns per unit of risk. Light Wonder is currently generating about -0.01 per unit of risk. If you would invest  1,017  in Accel Entertainment on April 22, 2024 and sell it today you would earn a total of  5.00  from holding Accel Entertainment or generate 0.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Accel Entertainment  vs.  Light Wonder

 Performance 
       Timeline  
Accel Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Accel Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Light Wonder 

Risk-Adjusted Performance

8 of 100

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

Accel Entertainment and Light Wonder Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Accel Entertainment and Light Wonder

The main advantage of trading using opposite Accel Entertainment and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accel Entertainment position performs unexpectedly, Light Wonder 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 Light Wonder will offset losses from the drop in Light Wonder's long position.
The idea behind Accel Entertainment and Light Wonder 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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