Correlation Between New Momentum and Wildpack Beverage

Can any of the company-specific risk be diversified away by investing in both New Momentum and Wildpack Beverage 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 Momentum and Wildpack Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Momentum and Wildpack Beverage, you can compare the effects of market volatilities on New Momentum and Wildpack Beverage 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 Momentum with a short position of Wildpack Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Momentum and Wildpack Beverage.

Diversification Opportunities for New Momentum and Wildpack Beverage

-0.71

Correlation Coefficient

New Momentum  Wildpack Beverage

Pay attention - limited upside

The 3 months correlation between New and Wildpack is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding New Momentum and Wildpack Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildpack Beverage and New Momentum 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 Momentum are associated (or correlated) with Wildpack Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildpack Beverage has no effect on the direction of New Momentum i.e., New Momentum and Wildpack Beverage go up and down completely randomly.

Pair Corralation between New Momentum and Wildpack Beverage

Given the investment horizon of 90 days New Momentum is expected to generate 2.5 times more return on investment than Wildpack Beverage. However, New Momentum is 2.5 times more volatile than Wildpack Beverage. It trades about 0.08 of its potential returns per unit of risk. Wildpack Beverage is currently generating about -0.13 per unit of risk. If you would invest  0.05  in New Momentum on December 29, 2024 and sell it today you would earn a total of  0.01  from holding New Momentum or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

New Momentum  vs.  Wildpack Beverage

New Momentum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Momentum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, New Momentum showed solid returns over the last few months and may actually be approaching a breakup point.

Wildpack Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wildpack Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with New Momentum and Wildpack Beverage

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

The idea behind New Momentum and Wildpack Beverage 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.