Correlation Between WM Technology and Fortune Bay

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

By analyzing existing cross correlation between WM Technology and Fortune Bay Corp, you can compare the effects of market volatilities on WM Technology and Fortune Bay 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 WM Technology with a short position of Fortune Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Fortune Bay.

Diversification Opportunities for WM Technology and Fortune Bay

-0.48

Correlation Coefficient

WM Technology  Fortune Bay

Very good diversification

The 3 months correlation between MAPSW and Fortune is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Fortune Bay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Bay Corp and WM Technology 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 WM Technology are associated (or correlated) with Fortune Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Bay Corp has no effect on the direction of WM Technology i.e., WM Technology and Fortune Bay go up and down completely randomly.

Pair Corralation between WM Technology and Fortune Bay

Assuming the 90 days horizon WM Technology is expected to generate 2.27 times more return on investment than Fortune Bay. However, WM Technology is 2.27 times more volatile than Fortune Bay Corp. It trades about 0.04 of its potential returns per unit of risk. Fortune Bay Corp is currently generating about 0.04 per unit of risk. If you would invest  3.80  in WM Technology on September 12, 2024 and sell it today you would lose (0.76) from holding WM Technology or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

WM Technology  vs.  Fortune Bay Corp

WM Technology

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Fortune Bay Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Bay Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Fortune Bay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WM Technology and Fortune Bay

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

The idea behind WM Technology and Fortune Bay Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.