Correlation Between I Tech and Gapwaves

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

By analyzing existing cross correlation between I Tech and Gapwaves AB Series, you can compare the effects of market volatilities on I Tech and Gapwaves 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 I Tech with a short position of Gapwaves. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tech and Gapwaves.

Diversification Opportunities for I Tech and Gapwaves

-0.78

Correlation Coefficient

I Tech  Gapwaves

Pay attention - limited upside

The 3 months correlation between ITECH and Gapwaves is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Gapwaves AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gapwaves AB Series and I Tech 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 I Tech are associated (or correlated) with Gapwaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gapwaves AB Series has no effect on the direction of I Tech i.e., I Tech and Gapwaves go up and down completely randomly.

Pair Corralation between I Tech and Gapwaves

Assuming the 90 days trading horizon I Tech is expected to generate 0.31 times more return on investment than Gapwaves. However, I Tech is 3.26 times less risky than Gapwaves. It trades about 0.43 of its potential returns per unit of risk. Gapwaves AB Series is currently generating about -0.09 per unit of risk. If you would invest  4,780  in I Tech on September 27, 2024 and sell it today you would earn a total of  1,020  from holding I Tech or generate 21.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

I Tech  vs.  Gapwaves AB Series

I Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gapwaves AB Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gapwaves AB Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with I Tech and Gapwaves

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

The idea behind I Tech and Gapwaves AB Series 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.