Correlation Between Fobi AI and NowVertical

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

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

Diversification Opportunities for Fobi AI and NowVertical

0.31

Correlation Coefficient

Fobi AI  NowVertical

Weak diversification

The 3 months correlation between Fobi and NowVertical is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fobi AI and NowVertical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NowVertical Group and Fobi AI 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 Fobi AI are associated (or correlated) with NowVertical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NowVertical Group has no effect on the direction of Fobi AI i.e., Fobi AI and NowVertical go up and down completely randomly.

Pair Corralation between Fobi AI and NowVertical

Assuming the 90 days horizon Fobi AI is expected to generate 10.63 times more return on investment than NowVertical. However, Fobi AI is 10.63 times more volatile than NowVertical Group. It trades about 0.14 of its potential returns per unit of risk. NowVertical Group is currently generating about 0.11 per unit of risk. If you would invest  1.30  in Fobi AI on December 30, 2024 and sell it today you would lose (0.20) from holding Fobi AI or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Fobi AI  vs.  NowVertical Group

Fobi AI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fobi AI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Fobi AI reported solid returns over the last few months and may actually be approaching a breakup point.

NowVertical Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NowVertical Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NowVertical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fobi AI and NowVertical

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

The idea behind Fobi AI and NowVertical Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.