Correlation Between Dave Warrants and TROOPS

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

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

Diversification Opportunities for Dave Warrants and TROOPS

-0.06

Correlation Coefficient

Dave Warrants  TROOPS

Good diversification

The 3 months correlation between Dave and TROOPS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dave Warrants and TROOPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROOPS Inc and Dave Warrants 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 Dave Warrants are associated (or correlated) with TROOPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROOPS Inc has no effect on the direction of Dave Warrants i.e., Dave Warrants and TROOPS go up and down completely randomly.

Pair Corralation between Dave Warrants and TROOPS

Assuming the 90 days horizon Dave Warrants is expected to generate 1.69 times more return on investment than TROOPS. However, Dave Warrants is 1.69 times more volatile than TROOPS Inc. It trades about 0.02 of its potential returns per unit of risk. TROOPS Inc is currently generating about -0.2 per unit of risk. If you would invest  25.00  in Dave Warrants on December 28, 2024 and sell it today you would lose (4.00) from holding Dave Warrants or give up 16.0% of portfolio value over 90 days.

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

Dave Warrants  vs.  TROOPS Inc

Dave Warrants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Warrants are ranked lower than 1 (%) 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.

TROOPS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TROOPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dave Warrants and TROOPS

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

The idea behind Dave Warrants and TROOPS Inc 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.