Correlation Between Newtek Business and Aquagold International

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

By analyzing existing cross correlation between Newtek Business Services and Aquagold International, you can compare the effects of market volatilities on Newtek Business and Aquagold International 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 Newtek Business with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtek Business and Aquagold International.

Diversification Opportunities for Newtek Business and Aquagold International

0.07

Correlation Coefficient

Newtek Business  Aquagold International

Significant diversification

The 3 months correlation between Newtek and Aquagold is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Newtek Business 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 Newtek Business Services are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Newtek Business i.e., Newtek Business and Aquagold International go up and down completely randomly.

Pair Corralation between Newtek Business and Aquagold International

Given the investment horizon of 90 days Newtek Business Services is expected to under-perform the Aquagold International. But the stock apears to be less risky and, when comparing its historical volatility, Newtek Business Services is 18.76 times less risky than Aquagold International. The stock trades about -0.01 of its potential returns per unit of risk. The Aquagold International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Aquagold International on September 29, 2024 and sell it today you would lose (11.96) from holding Aquagold International or give up 99.67% of portfolio value over 90 days.

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

Newtek Business Services  vs.  Aquagold International

Newtek Business Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Newtek Business may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Newtek Business and Aquagold International

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

The idea behind Newtek Business Services and Aquagold International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.