Correlation Between Couchbase and Wex
Can any of the company-specific risk be diversified away by investing in both Couchbase and Wex 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 Couchbase and Wex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Couchbase and Wex Inc, you can compare the effects of market volatilities on Couchbase and Wex 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 Couchbase with a short position of Wex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Couchbase and Wex.
Diversification Opportunities for Couchbase and Wex
Poor diversification
The 3 months correlation between Couchbase and Wex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Couchbase and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and Couchbase 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 Couchbase are associated (or correlated) with Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of Couchbase i.e., Couchbase and Wex go up and down completely randomly.
Pair Corralation between Couchbase and Wex
Given the investment horizon of 90 days Couchbase is expected to generate 2.19 times more return on investment than Wex. However, Couchbase is 2.19 times more volatile than Wex Inc. It trades about 0.05 of its potential returns per unit of risk. Wex Inc is currently generating about 0.08 per unit of risk. If you would invest 1,625 in Couchbase on November 1, 2024 and sell it today you would earn a total of 113.00 from holding Couchbase or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Couchbase vs. Wex Inc
Performance |
| Timeline |
| Couchbase |
| Wex Inc |
Couchbase and Wex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Couchbase and Wex
The main advantage of trading using opposite Couchbase and Wex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Couchbase position performs unexpectedly, Wex 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 Wex will offset losses from the drop in Wex's long position.| Couchbase vs. Evertec | Couchbase vs. Flywire Corp | Couchbase vs. i3 Verticals | Couchbase vs. CSG Systems International |
| Wex vs. CSG Systems International | Wex vs. VeriSign | Wex vs. Consensus Cloud Solutions | Wex vs. Global Blue Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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