Correlation Between Aveng and We Buy

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

By analyzing existing cross correlation between Aveng and We Buy Cars, you can compare the effects of market volatilities on Aveng and We Buy 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 Aveng with a short position of We Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aveng and We Buy.

Diversification Opportunities for Aveng and We Buy

0.92

Correlation Coefficient

Aveng  We Buy

Almost no diversification

The 3 months correlation between Aveng and WBC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aveng and We Buy Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on We Buy Cars and Aveng 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 Aveng are associated (or correlated) with We Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of We Buy Cars has no effect on the direction of Aveng i.e., Aveng and We Buy go up and down completely randomly.

Pair Corralation between Aveng and We Buy

Assuming the 90 days trading horizon Aveng is expected to under-perform the We Buy. In addition to that, Aveng is 1.55 times more volatile than We Buy Cars. It trades about 0.0 of its total potential returns per unit of risk. We Buy Cars is currently generating about 0.22 per unit of volatility. If you would invest  202,891  in We Buy Cars on September 23, 2024 and sell it today you would earn a total of  227,209  from holding We Buy Cars or generate 111.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	35.83%
Values	Daily Returns

Aveng  vs.  We Buy Cars

Aveng

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aveng are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Aveng exhibited solid returns over the last few months and may actually be approaching a breakup point.

We Buy Cars

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in We Buy Cars are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, We Buy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aveng and We Buy

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

The idea behind Aveng and We Buy Cars 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.