Correlation Between TRADEGATE and Big Yellow

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

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

Diversification Opportunities for TRADEGATE and Big Yellow

-0.55

Correlation Coefficient

TRADEGATE  Big Yellow

Excellent diversification

The 3 months correlation between TRADEGATE and Big is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and TRADEGATE 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 TRADEGATE are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of TRADEGATE i.e., TRADEGATE and Big Yellow go up and down completely randomly.

Pair Corralation between TRADEGATE and Big Yellow

Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.2 times more return on investment than Big Yellow. However, TRADEGATE is 5.07 times less risky than Big Yellow. It trades about -0.04 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.02 per unit of risk. If you would invest  9,050  in TRADEGATE on October 4, 2024 and sell it today you would lose (50.00) from holding TRADEGATE or give up 0.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

TRADEGATE  vs.  Big Yellow Group

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Big Yellow Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TRADEGATE and Big Yellow

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

The idea behind TRADEGATE and Big Yellow Group 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.