Correlation Between TGIF and WKLY

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Can any of the company-specific risk be diversified away by investing in both TGIF and WKLY 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 TGIF and WKLY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TGIF and WKLY, you can compare the effects of market volatilities on TGIF and WKLY 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 TGIF with a short position of WKLY. Check out your portfolio center. Please also check ongoing floating volatility patterns of TGIF and WKLY.

Diversification Opportunities for TGIF and WKLY

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between TGIF and WKLY

If you would invest (100.00) in WKLY on December 18, 2024 and sell it today you would earn a total of  100.00  from holding WKLY or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

TGIF  vs.  WKLY

 Performance 
       Timeline  
TGIF 

Risk-Adjusted Performance

Very Weak

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

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days WKLY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, WKLY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TGIF and WKLY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TGIF and WKLY

The main advantage of trading using opposite TGIF and WKLY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TGIF position performs unexpectedly, WKLY 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 WKLY will offset losses from the drop in WKLY's long position.
The idea behind TGIF and WKLY 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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