Correlation Between Slate Grocery and WildBrain

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

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

Diversification Opportunities for Slate Grocery and WildBrain

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Correlation Coefficient

Slate Grocery  WildBrain

Pay attention - limited upside

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

Pair Corralation between Slate Grocery and WildBrain

Assuming the 90 days trading horizon Slate Grocery REIT is expected to generate 0.34 times more return on investment than WildBrain. However, Slate Grocery REIT is 2.96 times less risky than WildBrain. It trades about 0.01 of its potential returns per unit of risk. WildBrain is currently generating about 0.0 per unit of risk. If you would invest  1,022  in Slate Grocery REIT on September 13, 2024 and sell it today you would earn a total of  3.00  from holding Slate Grocery REIT or generate 0.29% return on investment over 90 days.

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

Slate Grocery REIT  vs.  WildBrain

Slate Grocery REIT

Risk-Adjusted Performance

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Insignificant

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

WildBrain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WildBrain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WildBrain is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Slate Grocery and WildBrain

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

The idea behind Slate Grocery REIT and WildBrain 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.