Correlation Between Technology Select and Unusual Whales

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

By analyzing existing cross correlation between Technology Select Sector and Unusual Whales Subversive, you can compare the effects of market volatilities on Technology Select and Unusual Whales 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 Technology Select with a short position of Unusual Whales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Unusual Whales.

Diversification Opportunities for Technology Select and Unusual Whales

0.87

Correlation Coefficient

Technology Select  Unusual Whales

Very poor diversification

The 3 months correlation between Technology and Unusual is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Unusual Whales Subversive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unusual Whales Subversive and Technology Select 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 Technology Select Sector are associated (or correlated) with Unusual Whales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unusual Whales Subversive has no effect on the direction of Technology Select i.e., Technology Select and Unusual Whales go up and down completely randomly.

Pair Corralation between Technology Select and Unusual Whales

Considering the 90-day investment horizon Technology Select Sector is expected to generate 1.35 times more return on investment than Unusual Whales. However, Technology Select is 1.35 times more volatile than Unusual Whales Subversive. It trades about 0.12 of its potential returns per unit of risk. Unusual Whales Subversive is currently generating about 0.1 per unit of risk. If you would invest  11,932  in Technology Select Sector on September 26, 2024 and sell it today you would earn a total of  12,121  from holding Technology Select Sector or generate 101.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.56%
Values	Daily Returns

Technology Select Sector  vs.  Unusual Whales Subversive

Technology Select Sector

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Select Sector are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Technology Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unusual Whales Subversive

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unusual Whales Subversive are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Unusual Whales is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Technology Select and Unusual Whales

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

The idea behind Technology Select Sector and Unusual Whales Subversive 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.