Correlation Between Adyen NV and WSDMTR ERNGS

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

By analyzing existing cross correlation between Adyen NV and WSDMTR ERNGS 500, you can compare the effects of market volatilities on Adyen NV and WSDMTR ERNGS 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 Adyen NV with a short position of WSDMTR ERNGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and WSDMTR ERNGS.

Diversification Opportunities for Adyen NV and WSDMTR ERNGS

-0.04

Correlation Coefficient

Adyen NV  WSDMTR ERNGS

Good diversification

The 3 months correlation between Adyen and WSDMTR is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and WSDMTR ERNGS 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSDMTR ERNGS 500 and Adyen NV 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 Adyen NV are associated (or correlated) with WSDMTR ERNGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSDMTR ERNGS 500 has no effect on the direction of Adyen NV i.e., Adyen NV and WSDMTR ERNGS go up and down completely randomly.

Pair Corralation between Adyen NV and WSDMTR ERNGS

Assuming the 90 days horizon Adyen NV is expected to generate 1.98 times less return on investment than WSDMTR ERNGS. In addition to that, Adyen NV is 2.31 times more volatile than WSDMTR ERNGS 500. It trades about 0.04 of its total potential returns per unit of risk. WSDMTR ERNGS 500 is currently generating about 0.18 per unit of volatility. If you would invest  3,791  in WSDMTR ERNGS 500 on October 20, 2024 and sell it today you would earn a total of  2,418  from holding WSDMTR ERNGS 500 or generate 63.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Adyen NV  vs.  WSDMTR ERNGS 500

Adyen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adyen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Adyen NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

WSDMTR ERNGS 500

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WSDMTR ERNGS 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, WSDMTR ERNGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Adyen NV and WSDMTR ERNGS

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

The idea behind Adyen NV and WSDMTR ERNGS 500 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.