Correlation Between Allied Gaming and Waters

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

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

Diversification Opportunities for Allied Gaming and Waters

-0.31

Correlation Coefficient

Allied Gaming  Waters

Very good diversification

The 3 months correlation between Allied and Waters is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and Allied Gaming 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 Allied Gaming Entertainment are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Allied Gaming i.e., Allied Gaming and Waters go up and down completely randomly.

Pair Corralation between Allied Gaming and Waters

Given the investment horizon of 90 days Allied Gaming Entertainment is expected to under-perform the Waters. In addition to that, Allied Gaming is 1.31 times more volatile than Waters. It trades about -0.07 of its total potential returns per unit of risk. Waters is currently generating about 0.13 per unit of volatility. If you would invest  32,730  in Waters on October 24, 2024 and sell it today you would earn a total of  8,105  from holding Waters or generate 24.76% return on investment over 90 days.

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

Allied Gaming Entertainment  vs.  Waters

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Waters

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Gaming and Waters

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

The idea behind Allied Gaming Entertainment and Waters 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.