Correlation Between Faction Investment and Winpak

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

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

Diversification Opportunities for Faction Investment and Winpak

-0.23

Correlation Coefficient

Faction Investment  Winpak

Very good diversification

The 3 months correlation between Faction and Winpak is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Faction Investment Group and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Faction Investment 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 Faction Investment Group are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Faction Investment i.e., Faction Investment and Winpak go up and down completely randomly.

Pair Corralation between Faction Investment and Winpak

Assuming the 90 days trading horizon Faction Investment Group is expected to generate 29.45 times more return on investment than Winpak. However, Faction Investment is 29.45 times more volatile than Winpak. It trades about 0.18 of its potential returns per unit of risk. Winpak is currently generating about -0.16 per unit of risk. If you would invest  1.50  in Faction Investment Group on December 31, 2024 and sell it today you would earn a total of  13.50  from holding Faction Investment Group or generate 900.0% return on investment over 90 days.

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

Faction Investment Group  vs.  Winpak

Faction Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Faction Investment Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Faction Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Winpak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winpak 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 forward-looking signals remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Faction Investment and Winpak

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

The idea behind Faction Investment Group and Winpak 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.