Correlation Between Winmark and Tucows

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

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

Diversification Opportunities for Winmark and Tucows

-0.7

Correlation Coefficient

Winmark  Tucows

Excellent diversification

The 3 months correlation between Winmark and Tucows is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc and Winmark 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 Winmark are associated (or correlated) with Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of Winmark i.e., Winmark and Tucows go up and down completely randomly.

Pair Corralation between Winmark and Tucows

Given the investment horizon of 90 days Winmark is expected to under-perform the Tucows. But the stock apears to be less risky and, when comparing its historical volatility, Winmark is 2.56 times less risky than Tucows. The stock trades about -0.18 of its potential returns per unit of risk. The Tucows Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,657  in Tucows Inc on December 28, 2024 and sell it today you would earn a total of  52.00  from holding Tucows Inc or generate 3.14% return on investment over 90 days.

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

Winmark  vs.  Tucows Inc

Winmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Tucows Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tucows Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Tucows may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Winmark and Tucows

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

The idea behind Winmark and Tucows Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.