Correlation Between Wayside Technology and SPORT LISBOA

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

By analyzing existing cross correlation between Wayside Technology Group and SPORT LISBOA E, you can compare the effects of market volatilities on Wayside Technology and SPORT LISBOA 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 Wayside Technology with a short position of SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayside Technology and SPORT LISBOA.

Diversification Opportunities for Wayside Technology and SPORT LISBOA

0.08

Correlation Coefficient

Wayside Technology  SPORT LISBOA

Significant diversification

The 3 months correlation between Wayside and SPORT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and Wayside Technology 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 Wayside Technology Group are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Wayside Technology i.e., Wayside Technology and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Wayside Technology and SPORT LISBOA

Assuming the 90 days horizon Wayside Technology Group is expected to generate 1.2 times more return on investment than SPORT LISBOA. However, Wayside Technology is 1.2 times more volatile than SPORT LISBOA E. It trades about -0.03 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about -0.1 per unit of risk. If you would invest  13,500  in Wayside Technology Group on October 25, 2024 and sell it today you would lose (600.00) from holding Wayside Technology Group or give up 4.44% of portfolio value over 90 days.

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

Wayside Technology Group  vs.  SPORT LISBOA E

Wayside Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wayside Technology and SPORT LISBOA

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

The idea behind Wayside Technology Group and SPORT LISBOA E 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.