Correlation Between Gen Digital and Sharing Economy

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

By analyzing existing cross correlation between Gen Digital and Sharing Economy International, you can compare the effects of market volatilities on Gen Digital and Sharing Economy 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 Sharing Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gen Digital and Sharing Economy.

Diversification Opportunities for Gen Digital and Sharing Economy

-0.12

Correlation Coefficient

Gen Digital  Sharing Economy

Good diversification

The 3 months correlation between Gen and Sharing is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Sharing Economy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Economy Inte 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 Sharing Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Economy Inte has no effect on the direction of Gen Digital i.e., Gen Digital and Sharing Economy go up and down completely randomly.

Pair Corralation between Gen Digital and Sharing Economy

If you would invest  2,651  in Gen Digital on September 14, 2024 and sell it today you would earn a total of  351.00  from holding Gen Digital or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Gen Digital  vs.  Sharing Economy International

Gen Digital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gen Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Sharing Economy Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharing Economy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sharing Economy is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Gen Digital and Sharing Economy

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

The idea behind Gen Digital and Sharing Economy International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .