Correlation Between Gen Digital and Numinus Wellness

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

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

Diversification Opportunities for Gen Digital and Numinus Wellness

0.55

Correlation Coefficient

Gen Digital  Numinus Wellness

Very weak diversification

The 3 months correlation between Gen and Numinus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Numinus Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numinus Wellness and Gen Digital 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 Gen Digital are associated (or correlated) with Numinus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numinus Wellness has no effect on the direction of Gen Digital i.e., Gen Digital and Numinus Wellness go up and down completely randomly.

Pair Corralation between Gen Digital and Numinus Wellness

Considering the 90-day investment horizon Gen Digital is expected to generate 0.23 times more return on investment than Numinus Wellness. However, Gen Digital is 4.34 times less risky than Numinus Wellness. It trades about 0.07 of its potential returns per unit of risk. Numinus Wellness is currently generating about -0.03 per unit of risk. If you would invest  1,881  in Gen Digital on October 4, 2024 and sell it today you would earn a total of  867.00  from holding Gen Digital or generate 46.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Gen Digital  vs.  Numinus Wellness

Gen Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Gen Digital is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Numinus Wellness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Numinus Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gen Digital and Numinus Wellness

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

The idea behind Gen Digital and Numinus Wellness 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.