Correlation Between Mason Graphite and Widgie Nickel

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

By analyzing existing cross correlation between Mason Graphite and Widgie Nickel Limited, you can compare the effects of market volatilities on Mason Graphite and Widgie Nickel 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 Mason Graphite with a short position of Widgie Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mason Graphite and Widgie Nickel.

Diversification Opportunities for Mason Graphite and Widgie Nickel

0.68

Correlation Coefficient

Mason Graphite  Widgie Nickel

Poor diversification

The 3 months correlation between Mason and Widgie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mason Graphite and Widgie Nickel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widgie Nickel Limited and Mason Graphite 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 Mason Graphite are associated (or correlated) with Widgie Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widgie Nickel Limited has no effect on the direction of Mason Graphite i.e., Mason Graphite and Widgie Nickel go up and down completely randomly.

Pair Corralation between Mason Graphite and Widgie Nickel

Assuming the 90 days horizon Mason Graphite is expected to under-perform the Widgie Nickel. But the otc stock apears to be less risky and, when comparing its historical volatility, Mason Graphite is 14.91 times less risky than Widgie Nickel. The otc stock trades about -0.03 of its potential returns per unit of risk. The Widgie Nickel Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Widgie Nickel Limited on October 11, 2024 and sell it today you would lose (22.00) from holding Widgie Nickel Limited or give up 95.65% of portfolio value over 90 days.

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

Mason Graphite  vs.  Widgie Nickel Limited

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Widgie Nickel Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Widgie Nickel Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Widgie Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mason Graphite and Widgie Nickel

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

The idea behind Mason Graphite and Widgie Nickel Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.