Correlation Between WKLY and TGIF

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

Diversification Opportunities for WKLY and TGIF

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between WKLY and TGIF

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

WKLY  vs.  TGIF

 Performance 
       Timeline  
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 

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 and TGIF Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WKLY and TGIF

The main advantage of trading using opposite WKLY and TGIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WKLY position performs unexpectedly, TGIF 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 TGIF will offset losses from the drop in TGIF's long position.
The idea behind WKLY and TGIF 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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