Correlation Between Creek Road and World Technology

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

By analyzing existing cross correlation between Creek Road Miners and World Technology Corp, you can compare the effects of market volatilities on Creek Road and World Technology 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 Creek Road with a short position of World Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creek Road and World Technology.

Diversification Opportunities for Creek Road and World Technology

0.32

Correlation Coefficient

Creek Road  World Technology

Weak diversification

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

Pair Corralation between Creek Road and World Technology

Given the investment horizon of 90 days Creek Road Miners is expected to generate 0.89 times more return on investment than World Technology. However, Creek Road Miners is 1.12 times less risky than World Technology. It trades about 0.13 of its potential returns per unit of risk. World Technology Corp is currently generating about 0.06 per unit of risk. If you would invest  7.90  in Creek Road Miners on September 18, 2024 and sell it today you would earn a total of  15.10  from holding Creek Road Miners or generate 191.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.89%
Values	Daily Returns

Creek Road Miners  vs.  World Technology Corp

Creek Road Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creek Road Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Creek Road is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

World Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, World Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creek Road and World Technology

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

The idea behind Creek Road Miners and World Technology Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..