Correlation Between Golf and Fox Wizel

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

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

Diversification Opportunities for Golf and Fox Wizel

0.56

Correlation Coefficient

Golf  Fox Wizel

Very weak diversification

The 3 months correlation between Golf and Fox is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Golf Co Group and Fox Wizel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Wizel and Golf 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 Golf Co Group are associated (or correlated) with Fox Wizel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Wizel has no effect on the direction of Golf i.e., Golf and Fox Wizel go up and down completely randomly.

Pair Corralation between Golf and Fox Wizel

Assuming the 90 days trading horizon Golf Co Group is expected to generate 1.14 times more return on investment than Fox Wizel. However, Golf is 1.14 times more volatile than Fox Wizel. It trades about 0.16 of its potential returns per unit of risk. Fox Wizel is currently generating about 0.04 per unit of risk. If you would invest  34,990  in Golf Co Group on December 4, 2024 and sell it today you would earn a total of  37,480  from holding Golf Co Group or generate 107.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.48%
Values	Daily Returns

Golf Co Group  vs.  Fox Wizel

Golf Co Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golf Co Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golf sustained solid returns over the last few months and may actually be approaching a breakup point.

Fox Wizel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Wizel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fox Wizel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golf and Fox Wizel

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

The idea behind Golf Co Group and Fox Wizel 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.