Correlation Between WT Offshore and Pinterest

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

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

Diversification Opportunities for WT Offshore and Pinterest

0.41

Correlation Coefficient

WT Offshore  Pinterest

Very weak diversification

The 3 months correlation between WTI and Pinterest is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and WT Offshore 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 WT Offshore are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of WT Offshore i.e., WT Offshore and Pinterest go up and down completely randomly.

Pair Corralation between WT Offshore and Pinterest

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Pinterest. In addition to that, WT Offshore is 1.19 times more volatile than Pinterest. It trades about -0.07 of its total potential returns per unit of risk. Pinterest is currently generating about -0.02 per unit of volatility. If you would invest  3,738  in Pinterest on September 17, 2024 and sell it today you would lose (673.00) from holding Pinterest or give up 18.0% of portfolio value over 90 days.

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

WT Offshore  vs.  Pinterest

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pinterest

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WT Offshore and Pinterest

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

The idea behind WT Offshore and Pinterest 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.