Correlation Between Brand Engagement and Applied Digital

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

By analyzing existing cross correlation between Brand Engagement Network and Applied Digital, you can compare the effects of market volatilities on Brand Engagement and Applied Digital 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 Brand Engagement with a short position of Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brand Engagement and Applied Digital.

Diversification Opportunities for Brand Engagement and Applied Digital

-0.32

Correlation Coefficient

Brand Engagement  Applied Digital

Very good diversification

The 3 months correlation between Brand and Applied is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brand Engagement Network and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and Brand Engagement 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 Brand Engagement Network are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Brand Engagement i.e., Brand Engagement and Applied Digital go up and down completely randomly.

Pair Corralation between Brand Engagement and Applied Digital

Assuming the 90 days horizon Brand Engagement Network is expected to generate 5.34 times more return on investment than Applied Digital. However, Brand Engagement is 5.34 times more volatile than Applied Digital. It trades about 0.23 of its potential returns per unit of risk. Applied Digital is currently generating about 0.16 per unit of risk. If you would invest  2.16  in Brand Engagement Network on October 6, 2024 and sell it today you would earn a total of  2.99  from holding Brand Engagement Network or generate 138.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.29%
Values	Daily Returns

Brand Engagement Network  vs.  Applied Digital

Brand Engagement Network

Risk-Adjusted Performance

12 of 100

Good

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

Applied Digital

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brand Engagement and Applied Digital

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

The idea behind Brand Engagement Network and Applied Digital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.