Correlation Between Bill and SimilarWeb
Can any of the company-specific risk be diversified away by investing in both Bill and SimilarWeb 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 Bill and SimilarWeb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bill Com Holdings and SimilarWeb, you can compare the effects of market volatilities on Bill and SimilarWeb 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 Bill with a short position of SimilarWeb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and SimilarWeb.
Diversification Opportunities for Bill and SimilarWeb
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bill and SimilarWeb is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and SimilarWeb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimilarWeb and Bill 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 Bill Com Holdings are associated (or correlated) with SimilarWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimilarWeb has no effect on the direction of Bill i.e., Bill and SimilarWeb go up and down completely randomly.
Pair Corralation between Bill and SimilarWeb
Given the investment horizon of 90 days Bill Com Holdings is expected to under-perform the SimilarWeb. But the stock apears to be less risky and, when comparing its historical volatility, Bill Com Holdings is 1.08 times less risky than SimilarWeb. The stock trades about 0.0 of its potential returns per unit of risk. The SimilarWeb is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 675.00 in SimilarWeb on August 31, 2024 and sell it today you would earn a total of 566.00 from holding SimilarWeb or generate 83.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bill Com Holdings vs. SimilarWeb
Performance |
| Timeline |
| Bill Com Holdings |
| SimilarWeb |
Bill and SimilarWeb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bill and SimilarWeb
The main advantage of trading using opposite Bill and SimilarWeb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill position performs unexpectedly, SimilarWeb 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 SimilarWeb will offset losses from the drop in SimilarWeb's long position.The idea behind Bill Com Holdings and SimilarWeb 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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