Correlation Between Aware and Dave Warrants

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

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

Diversification Opportunities for Aware and Dave Warrants

-0.6

Correlation Coefficient

Aware  Dave Warrants

Excellent diversification

The 3 months correlation between Aware and Dave is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Dave Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Warrants and Aware 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 Aware Inc are associated (or correlated) with Dave Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Warrants has no effect on the direction of Aware i.e., Aware and Dave Warrants go up and down completely randomly.

Pair Corralation between Aware and Dave Warrants

Given the investment horizon of 90 days Aware Inc is expected to under-perform the Dave Warrants. But the stock apears to be less risky and, when comparing its historical volatility, Aware Inc is 6.37 times less risky than Dave Warrants. The stock trades about -0.09 of its potential returns per unit of risk. The Dave Warrants is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4.48  in Dave Warrants on September 15, 2024 and sell it today you would earn a total of  13.52  from holding Dave Warrants or generate 301.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Aware Inc  vs.  Dave Warrants

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dave Warrants

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Dave Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aware and Dave Warrants

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

The idea behind Aware Inc and Dave Warrants 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.