Correlation Between Newretail and Trade Van
Can any of the company-specific risk be diversified away by investing in both Newretail and Trade Van 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 Newretail and Trade Van into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Trade Van Information Services, you can compare the effects of market volatilities on Newretail and Trade Van 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 Newretail with a short position of Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Trade Van.
Diversification Opportunities for Newretail and Trade Van
Very weak diversification
The 3 months correlation between Newretail and Trade is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information and Newretail 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 Newretail Co are associated (or correlated) with Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Newretail i.e., Newretail and Trade Van go up and down completely randomly.
Pair Corralation between Newretail and Trade Van
Assuming the 90 days trading horizon Newretail Co is expected to under-perform the Trade Van. In addition to that, Newretail is 2.12 times more volatile than Trade Van Information Services. It trades about -0.09 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.32 per unit of volatility. If you would invest 8,100 in Trade Van Information Services on November 4, 2024 and sell it today you would earn a total of 1,160 from holding Trade Van Information Services or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. Trade Van Information Services
Performance |
| Timeline |
| Newretail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Trade Van Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Newretail and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Trade Van
The main advantage of trading using opposite Newretail and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van's long position.The idea behind Newretail Co and Trade Van Information Services 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets |