Correlation Between Forward Water and Simply Better

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

By analyzing existing cross correlation between Forward Water Technologies and Simply Better Brands, you can compare the effects of market volatilities on Forward Water and Simply Better 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 Forward Water with a short position of Simply Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Water and Simply Better.

Diversification Opportunities for Forward Water and Simply Better

-0.07

Correlation Coefficient

Forward Water  Simply Better

Good diversification

The 3 months correlation between Forward and Simply is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Forward Water Technologies and Simply Better Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Better Brands and Forward Water 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 Forward Water Technologies are associated (or correlated) with Simply Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Better Brands has no effect on the direction of Forward Water i.e., Forward Water and Simply Better go up and down completely randomly.

Pair Corralation between Forward Water and Simply Better

Assuming the 90 days trading horizon Forward Water Technologies is expected to generate 2.84 times more return on investment than Simply Better. However, Forward Water is 2.84 times more volatile than Simply Better Brands. It trades about 0.07 of its potential returns per unit of risk. Simply Better Brands is currently generating about -0.03 per unit of risk. If you would invest  6.00  in Forward Water Technologies on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Forward Water Technologies or generate 16.67% return on investment over 90 days.

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

Forward Water Technologies  vs.  Simply Better Brands

Forward Water Techno

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forward Water Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Forward Water showed solid returns over the last few months and may actually be approaching a breakup point.

Simply Better Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Better Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Forward Water and Simply Better

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

The idea behind Forward Water Technologies and Simply Better Brands 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .