Correlation Between WGHT WTCHER and NEW WORLD

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

By analyzing existing cross correlation between WGHT WTCHER INTL and NEW WORLD DEVCO, you can compare the effects of market volatilities on WGHT WTCHER and NEW WORLD 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 WGHT WTCHER with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of WGHT WTCHER and NEW WORLD.

Diversification Opportunities for WGHT WTCHER and NEW WORLD

-0.02

Correlation Coefficient

WGHT WTCHER  NEW WORLD

Good diversification

The 3 months correlation between WGHT and NEW is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding WGHT WTCHER INTL and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and WGHT WTCHER 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 WGHT WTCHER INTL are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of WGHT WTCHER i.e., WGHT WTCHER and NEW WORLD go up and down completely randomly.

Pair Corralation between WGHT WTCHER and NEW WORLD

Assuming the 90 days trading horizon WGHT WTCHER INTL is expected to under-perform the NEW WORLD. In addition to that, WGHT WTCHER is 1.85 times more volatile than NEW WORLD DEVCO. It trades about -0.16 of its total potential returns per unit of risk. NEW WORLD DEVCO is currently generating about 0.02 per unit of volatility. If you would invest  63.00  in NEW WORLD DEVCO on December 25, 2024 and sell it today you would earn a total of  1.00  from holding NEW WORLD DEVCO or generate 1.59% return on investment over 90 days.

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

WGHT WTCHER INTL  vs.  NEW WORLD DEVCO

WGHT WTCHER INTL

Risk-Adjusted Performance

Very Weak

Over the last 90 days WGHT WTCHER INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NEW WORLD DEVCO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEW WORLD DEVCO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, NEW WORLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WGHT WTCHER and NEW WORLD

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

The idea behind WGHT WTCHER INTL and NEW WORLD DEVCO 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.