Correlation Between New Wave and Unlimited Travel
Can any of the company-specific risk be diversified away by investing in both New Wave and Unlimited Travel 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 New Wave and Unlimited Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Group and Unlimited Travel Group, you can compare the effects of market volatilities on New Wave and Unlimited Travel 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 New Wave with a short position of Unlimited Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Unlimited Travel.
Diversification Opportunities for New Wave and Unlimited Travel
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Unlimited is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Unlimited Travel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unlimited Travel and New Wave 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 New Wave Group are associated (or correlated) with Unlimited Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unlimited Travel has no effect on the direction of New Wave i.e., New Wave and Unlimited Travel go up and down completely randomly.
Pair Corralation between New Wave and Unlimited Travel
Assuming the 90 days trading horizon New Wave Group is expected to under-perform the Unlimited Travel. In addition to that, New Wave is 1.02 times more volatile than Unlimited Travel Group. It trades about -0.09 of its total potential returns per unit of risk. Unlimited Travel Group is currently generating about 0.07 per unit of volatility. If you would invest 1,260 in Unlimited Travel Group on September 23, 2024 and sell it today you would earn a total of 70.00 from holding Unlimited Travel Group or generate 5.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
New Wave Group vs. Unlimited Travel Group
Performance |
Timeline |
New Wave Group |
Unlimited Travel |
New Wave and Unlimited Travel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Wave and Unlimited Travel
The main advantage of trading using opposite New Wave and Unlimited Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Unlimited Travel 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 Unlimited Travel will offset losses from the drop in Unlimited Travel's long position.New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group AB |
Unlimited Travel vs. Byggmax Group AB | Unlimited Travel vs. Svedbergs i Dalstorp | Unlimited Travel vs. Inwido AB | Unlimited Travel vs. New Wave Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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