Correlation Between Guild Esports and New Wave

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

By analyzing existing cross correlation between Guild Esports Plc and New Wave Holdings, you can compare the effects of market volatilities on Guild Esports and New Wave 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 Guild Esports with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Esports and New Wave.

Diversification Opportunities for Guild Esports and New Wave

0.43

Correlation Coefficient

Guild Esports  New Wave

Very weak diversification

The 3 months correlation between Guild and New is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Guild Esports Plc and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Guild Esports 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 Guild Esports Plc are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Guild Esports i.e., Guild Esports and New Wave go up and down completely randomly.

Pair Corralation between Guild Esports and New Wave

Assuming the 90 days horizon Guild Esports Plc is expected to generate 6.78 times more return on investment than New Wave. However, Guild Esports is 6.78 times more volatile than New Wave Holdings. It trades about 0.08 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.06 per unit of risk. If you would invest  0.74  in Guild Esports Plc on December 28, 2024 and sell it today you would lose (0.73) from holding Guild Esports Plc or give up 98.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Guild Esports Plc  vs.  New Wave Holdings

Guild Esports Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Guild Esports reported solid returns over the last few months and may actually be approaching a breakup point.

New Wave Holdings

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Guild Esports and New Wave

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

The idea behind Guild Esports Plc and New Wave Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.