Correlation Between Energous and Wrap Technologies

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

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

Diversification Opportunities for Energous and Wrap Technologies

0.13

Correlation Coefficient

Energous  Wrap Technologies

Average diversification

The 3 months correlation between Energous and Wrap is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Energous and Wrap Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wrap Technologies and Energous 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 Energous are associated (or correlated) with Wrap Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wrap Technologies has no effect on the direction of Energous i.e., Energous and Wrap Technologies go up and down completely randomly.

Pair Corralation between Energous and Wrap Technologies

Given the investment horizon of 90 days Energous is expected to generate 13.47 times more return on investment than Wrap Technologies. However, Energous is 13.47 times more volatile than Wrap Technologies. It trades about 0.1 of its potential returns per unit of risk. Wrap Technologies is currently generating about 0.1 per unit of risk. If you would invest  29.00  in Energous on December 20, 2024 and sell it today you would earn a total of  4.00  from holding Energous or generate 13.79% return on investment over 90 days.

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

Energous  vs.  Wrap Technologies

Energous

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energous are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Energous unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wrap Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wrap Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Wrap Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energous and Wrap Technologies

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

The idea behind Energous and Wrap Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..