Correlation Between PWFL Old and Wegener

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

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

Diversification Opportunities for PWFL Old and Wegener

0.0

Correlation Coefficient

PWFL Old  Wegener

Pay attention - limited upside

The 3 months correlation between PWFL and Wegener is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PWFL Old and Wegener in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wegener and PWFL Old 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 PWFL Old are associated (or correlated) with Wegener. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wegener has no effect on the direction of PWFL Old i.e., PWFL Old and Wegener go up and down completely randomly.

Pair Corralation between PWFL Old and Wegener

Given the investment horizon of 90 days PWFL Old is expected to generate 14.45 times less return on investment than Wegener. But when comparing it to its historical volatility, PWFL Old is 6.58 times less risky than Wegener. It trades about 0.06 of its potential returns per unit of risk. Wegener is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.95  in Wegener on October 27, 2024 and sell it today you would earn a total of  3.05  from holding Wegener or generate 321.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	32.13%
Values	Daily Returns

PWFL Old  vs.  Wegener

PWFL Old

Risk-Adjusted Performance

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Very Weak

Over the last 90 days PWFL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, PWFL Old is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Wegener

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wegener has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wegener is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PWFL Old and Wegener

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

The idea behind PWFL Old and Wegener 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.