Correlation Between Hall Of and New Wave

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

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

Diversification Opportunities for Hall Of and New Wave

0.43

Correlation Coefficient

Hall Of  New Wave

Very weak diversification

The 3 months correlation between Hall and New is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hall of Fame 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 Hall Of 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 Hall of Fame 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 Hall Of i.e., Hall Of and New Wave go up and down completely randomly.

Pair Corralation between Hall Of and New Wave

Assuming the 90 days horizon Hall of Fame is expected to generate 1.6 times more return on investment than New Wave. However, Hall Of is 1.6 times more volatile than New Wave Holdings. It trades about 0.03 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.03 per unit of risk. If you would invest  0.46  in Hall of Fame on December 24, 2024 and sell it today you would lose (0.20) from holding Hall of Fame or give up 43.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.38%
Values	Daily Returns

Hall of Fame  vs.  New Wave Holdings

Hall of Fame

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hall of Fame are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hall Of showed solid returns over the last few months and may actually be approaching a breakup point.

New Wave Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Wave Holdings are ranked lower than 1 (%) 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 Hall Of and New Wave

The main advantage of trading using opposite Hall Of and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hall Of 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 Hall of Fame 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.