Correlation Between Vertex and Wag Group

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

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

Diversification Opportunities for Vertex and Wag Group

-0.54

Correlation Coefficient

Vertex  Wag Group

Excellent diversification

The 3 months correlation between Vertex and Wag is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group and Vertex 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 Vertex are associated (or correlated) with Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Vertex i.e., Vertex and Wag Group go up and down completely randomly.

Pair Corralation between Vertex and Wag Group

Given the investment horizon of 90 days Vertex is expected to under-perform the Wag Group. But the stock apears to be less risky and, when comparing its historical volatility, Vertex is 5.17 times less risky than Wag Group. The stock trades about -0.24 of its potential returns per unit of risk. The Wag Group Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.59  in Wag Group Co on December 2, 2024 and sell it today you would earn a total of  1.89  from holding Wag Group Co or generate 118.87% return on investment over 90 days.

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

Vertex  vs.  Wag Group Co

Vertex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wag Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wag Group Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Wag Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertex and Wag Group

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

The idea behind Vertex and Wag Group Co 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.

Check out your portfolio center.

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.