Correlation Between Numinus Wellness and Firm Capital

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Can any of the company-specific risk be diversified away by investing in both Numinus Wellness and Firm Capital 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 Numinus Wellness and Firm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Numinus Wellness and Firm Capital Mortgage, you can compare the effects of market volatilities on Numinus Wellness and Firm Capital 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 Numinus Wellness with a short position of Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Numinus Wellness and Firm Capital.

Diversification Opportunities for Numinus Wellness and Firm Capital

NuminusFirmDiversified AwayNuminusFirmDiversified Away100%
-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Numinus and Firm is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Numinus Wellness and Firm Capital Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Mortgage and Numinus Wellness 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 Numinus Wellness are associated (or correlated) with Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Mortgage has no effect on the direction of Numinus Wellness i.e., Numinus Wellness and Firm Capital go up and down completely randomly.

Pair Corralation between Numinus Wellness and Firm Capital

Assuming the 90 days trading horizon Numinus Wellness is expected to generate 8.94 times more return on investment than Firm Capital. However, Numinus Wellness is 8.94 times more volatile than Firm Capital Mortgage. It trades about 0.05 of its potential returns per unit of risk. Firm Capital Mortgage is currently generating about 0.11 per unit of risk. If you would invest  5.00  in Numinus Wellness on November 21, 2024 and sell it today you would earn a total of  0.00  from holding Numinus Wellness or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Numinus Wellness  vs.  Firm Capital Mortgage

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-20020
JavaScript chart by amCharts 3.21.15NUMI FC
       Timeline  
Numinus Wellness 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Numinus Wellness displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0350.040.0450.050.055
Firm Capital Mortgage 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Mortgage are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.211.411.611.81212.2

Numinus Wellness and Firm Capital Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-20.06-15.02-9.99-4.950.04.929.9214.9319.93 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15NUMI FC
       Returns  

Pair Trading with Numinus Wellness and Firm Capital

The main advantage of trading using opposite Numinus Wellness and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Numinus Wellness position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Numinus Wellness as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Numinus Wellness' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Numinus Wellness' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Numinus Wellness.
The idea behind Numinus Wellness and Firm Capital Mortgage 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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