Correlation Between Widepoint and Information Services

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

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

Diversification Opportunities for Widepoint and Information Services

0.84

Correlation Coefficient

Widepoint  Information Services

Very poor diversification

The 3 months correlation between Widepoint and Information is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Widepoint C and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services and Widepoint 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 Widepoint C are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Widepoint i.e., Widepoint and Information Services go up and down completely randomly.

Pair Corralation between Widepoint and Information Services

Considering the 90-day investment horizon Widepoint C is expected to under-perform the Information Services. In addition to that, Widepoint is 2.86 times more volatile than Information Services Group. It trades about -0.37 of its total potential returns per unit of risk. Information Services Group is currently generating about -0.38 per unit of volatility. If you would invest  355.00  in Information Services Group on October 17, 2024 and sell it today you would lose (45.00) from holding Information Services Group or give up 12.68% of portfolio value over 90 days.

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

Widepoint C  vs.  Information Services Group

Widepoint C

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Widepoint C are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Widepoint may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Information Services is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Widepoint and Information Services

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

The idea behind Widepoint C and Information Services Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.