Correlation Between Origin Materials and WBX WT

Can any of the company-specific risk be diversified away by investing in both Origin Materials and WBX WT 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 Origin Materials and WBX WT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Origin Materials Warrant and WBX WT, you can compare the effects of market volatilities on Origin Materials and WBX WT 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 Origin Materials with a short position of WBX WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and WBX WT.

Diversification Opportunities for Origin Materials and WBX WT

-0.05

Correlation Coefficient

Origin Materials  WBX WT

Good diversification

The 3 months correlation between Origin and WBX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials Warrant and WBX WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBX WT and Origin Materials 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 Origin Materials Warrant are associated (or correlated) with WBX WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBX WT has no effect on the direction of Origin Materials i.e., Origin Materials and WBX WT go up and down completely randomly.

Pair Corralation between Origin Materials and WBX WT

Assuming the 90 days horizon Origin Materials Warrant is expected to under-perform the WBX WT. But the stock apears to be less risky and, when comparing its historical volatility, Origin Materials Warrant is 2.22 times less risky than WBX WT. The stock trades about -0.04 of its potential returns per unit of risk. The WBX WT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5.00  in WBX WT on September 30, 2024 and sell it today you would lose (1.00) from holding WBX WT or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Origin Materials Warrant  vs.  WBX WT

Origin Materials Warrant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

WBX WT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WBX WT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, WBX WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Materials and WBX WT

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

The idea behind Origin Materials Warrant and WBX WT 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.