Correlation Between Stagwell and BitFuFu Warrant

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

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

Diversification Opportunities for Stagwell and BitFuFu Warrant

0.19

Correlation Coefficient

Stagwell  BitFuFu Warrant

Average diversification

The 3 months correlation between Stagwell and BitFuFu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and BitFuFu Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFuFu Warrant and Stagwell 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 Stagwell are associated (or correlated) with BitFuFu Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFuFu Warrant has no effect on the direction of Stagwell i.e., Stagwell and BitFuFu Warrant go up and down completely randomly.

Pair Corralation between Stagwell and BitFuFu Warrant

Given the investment horizon of 90 days Stagwell is expected to under-perform the BitFuFu Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Stagwell is 3.95 times less risky than BitFuFu Warrant. The stock trades about -0.05 of its potential returns per unit of risk. The BitFuFu Warrant is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  54.00  in BitFuFu Warrant on December 21, 2024 and sell it today you would lose (9.00) from holding BitFuFu Warrant or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Stagwell  vs.  BitFuFu Warrant

Stagwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

BitFuFu Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days BitFuFu Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BitFuFu Warrant is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Stagwell and BitFuFu Warrant

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

The idea behind Stagwell and BitFuFu Warrant 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.