Correlation Between In Style and RTW Venture

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

By analyzing existing cross correlation between in Style Group and RTW Venture Fund, you can compare the effects of market volatilities on In Style and RTW Venture 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 In Style with a short position of RTW Venture. Check out your portfolio center. Please also check ongoing floating volatility patterns of In Style and RTW Venture.

Diversification Opportunities for In Style and RTW Venture

-0.18

Correlation Coefficient

In Style  RTW Venture

Good diversification

The 3 months correlation between ITS and RTW is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding in Style Group and RTW Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTW Venture Fund and In Style 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 in Style Group are associated (or correlated) with RTW Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTW Venture Fund has no effect on the direction of In Style i.e., In Style and RTW Venture go up and down completely randomly.

Pair Corralation between In Style and RTW Venture

Assuming the 90 days trading horizon in Style Group is expected to generate 30.26 times more return on investment than RTW Venture. However, In Style is 30.26 times more volatile than RTW Venture Fund. It trades about 0.05 of its potential returns per unit of risk. RTW Venture Fund is currently generating about 0.02 per unit of risk. If you would invest  670.00  in in Style Group on September 26, 2024 and sell it today you would earn a total of  389,330  from holding in Style Group or generate 58108.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

in Style Group  vs.  RTW Venture Fund

in Style Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days in Style Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, In Style is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RTW Venture Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with In Style and RTW Venture

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

The idea behind in Style Group and RTW Venture Fund 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.