Correlation Between WixCom and Skillz Platform

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

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

Diversification Opportunities for WixCom and Skillz Platform

0.45

Correlation Coefficient

WixCom  Skillz Platform

Very weak diversification

The 3 months correlation between WixCom and Skillz is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding WixCom and Skillz Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillz Platform and WixCom 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 WixCom are associated (or correlated) with Skillz Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillz Platform has no effect on the direction of WixCom i.e., WixCom and Skillz Platform go up and down completely randomly.

Pair Corralation between WixCom and Skillz Platform

Considering the 90-day investment horizon WixCom is expected to under-perform the Skillz Platform. But the stock apears to be less risky and, when comparing its historical volatility, WixCom is 1.81 times less risky than Skillz Platform. The stock trades about -0.08 of its potential returns per unit of risk. The Skillz Platform is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Skillz Platform on November 28, 2024 and sell it today you would lose (15.00) from holding Skillz Platform or give up 2.63% of portfolio value over 90 days.

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

WixCom  vs.  Skillz Platform

WixCom

Risk-Adjusted Performance

Very Weak

Over the last 90 days WixCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Skillz Platform

Risk-Adjusted Performance

Very Weak

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

Pair Trading with WixCom and Skillz Platform

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

The idea behind WixCom and Skillz Platform 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.