Correlation Between Descartes Systems and Wag Group

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

By analyzing existing cross correlation between Descartes Systems Group and Wag Group Co, you can compare the effects of market volatilities on Descartes Systems and Wag Group 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 Descartes Systems with a short position of Wag Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Descartes Systems and Wag Group.

Diversification Opportunities for Descartes Systems and Wag Group

-0.74

Correlation Coefficient

Descartes Systems  Wag Group

Pay attention - limited upside

The 3 months correlation between Descartes and Wag is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Descartes Systems i.e., Descartes Systems and Wag Group go up and down completely randomly.

Pair Corralation between Descartes Systems and Wag Group

Given the investment horizon of 90 days Descartes Systems Group is expected to generate 0.07 times more return on investment than Wag Group. However, Descartes Systems Group is 14.63 times less risky than Wag Group. It trades about 0.23 of its potential returns per unit of risk. Wag Group Co is currently generating about 0.0 per unit of risk. If you would invest  9,533  in Descartes Systems Group on September 5, 2024 and sell it today you would earn a total of  2,069  from holding Descartes Systems Group or generate 21.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Descartes Systems Group  vs.  Wag Group Co

Descartes Systems

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Descartes Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Wag Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wag Group Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wag Group is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Descartes Systems and Wag Group

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

The idea behind Descartes Systems Group and Wag Group Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.