Correlation Between Aquagold International and Inverse Dow

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

By analyzing existing cross correlation between Aquagold International and Inverse Dow 2x, you can compare the effects of market volatilities on Aquagold International and Inverse Dow 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 Aquagold International with a short position of Inverse Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Inverse Dow.

Diversification Opportunities for Aquagold International and Inverse Dow

0.29

Correlation Coefficient

Aquagold International  Inverse Dow

Modest diversification

The 3 months correlation between Aquagold and Inverse is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Inverse Dow 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Dow 2x and Aquagold International 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 Aquagold International are associated (or correlated) with Inverse Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Dow 2x has no effect on the direction of Aquagold International i.e., Aquagold International and Inverse Dow go up and down completely randomly.

Pair Corralation between Aquagold International and Inverse Dow

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Inverse Dow. In addition to that, Aquagold International is 3.71 times more volatile than Inverse Dow 2x. It trades about -0.13 of its total potential returns per unit of risk. Inverse Dow 2x is currently generating about 0.06 per unit of volatility. If you would invest  11,705  in Inverse Dow 2x on December 21, 2024 and sell it today you would earn a total of  598.00  from holding Inverse Dow 2x or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Aquagold International  vs.  Inverse Dow 2x

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Inverse Dow 2x

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Dow 2x are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Inverse Dow is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Inverse Dow

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

The idea behind Aquagold International and Inverse Dow 2x 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.