Correlation Between Definity Financial and Totally Hip

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

By analyzing existing cross correlation between Definity Financial Corp and Totally Hip Technologies, you can compare the effects of market volatilities on Definity Financial and Totally Hip 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 Definity Financial with a short position of Totally Hip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Totally Hip.

Diversification Opportunities for Definity Financial and Totally Hip

-0.17

Correlation Coefficient

Definity Financial  Totally Hip

Good diversification

The 3 months correlation between Definity and Totally is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Totally Hip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Totally Hip Technologies and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Totally Hip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Totally Hip Technologies has no effect on the direction of Definity Financial i.e., Definity Financial and Totally Hip go up and down completely randomly.

Pair Corralation between Definity Financial and Totally Hip

Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.22 times more return on investment than Totally Hip. However, Definity Financial Corp is 4.49 times less risky than Totally Hip. It trades about 0.18 of its potential returns per unit of risk. Totally Hip Technologies is currently generating about -0.13 per unit of risk. If you would invest  5,033  in Definity Financial Corp on September 12, 2024 and sell it today you would earn a total of  847.00  from holding Definity Financial Corp or generate 16.83% return on investment over 90 days.

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

Definity Financial Corp  vs.  Totally Hip Technologies

Definity Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Definity Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Definity Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Totally Hip Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Totally Hip Technologies 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Definity Financial and Totally Hip

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

The idea behind Definity Financial Corp and Totally Hip Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.