Correlation Between Alexander Forbes and We Buy

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

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

Diversification Opportunities for Alexander Forbes and We Buy

0.59

Correlation Coefficient

Alexander Forbes  We Buy

Very weak diversification

The 3 months correlation between Alexander and WBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alexander Forbes Grp 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 Alexander Forbes 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 Alexander Forbes Grp 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 Alexander Forbes i.e., Alexander Forbes and We Buy go up and down completely randomly.

Pair Corralation between Alexander Forbes and We Buy

Assuming the 90 days trading horizon Alexander Forbes is expected to generate 1.37 times less return on investment than We Buy. In addition to that, Alexander Forbes is 1.28 times more volatile than We Buy Cars. It trades about 0.16 of its total potential returns per unit of risk. We Buy Cars is currently generating about 0.28 per unit of volatility. If you would invest  340,638  in We Buy Cars on September 23, 2024 and sell it today you would earn a total of  89,462  from holding We Buy Cars or generate 26.26% return on investment over 90 days.

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

Alexander Forbes Grp  vs.  We Buy Cars

Alexander Forbes Grp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Forbes Grp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alexander Forbes 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 Alexander Forbes and We Buy

The main advantage of trading using opposite Alexander Forbes and We Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexander Forbes 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 Alexander Forbes Grp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.