Correlation Between BuzzFeed and Netcapital
Can any of the company-specific risk be diversified away by investing in both BuzzFeed and Netcapital 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 BuzzFeed and Netcapital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BuzzFeed and Netcapital, you can compare the effects of market volatilities on BuzzFeed and Netcapital 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 BuzzFeed with a short position of Netcapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BuzzFeed and Netcapital.
Diversification Opportunities for BuzzFeed and Netcapital
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BuzzFeed and Netcapital is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BuzzFeed and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital and BuzzFeed 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 BuzzFeed are associated (or correlated) with Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of BuzzFeed i.e., BuzzFeed and Netcapital go up and down completely randomly.
Pair Corralation between BuzzFeed and Netcapital
Assuming the 90 days horizon BuzzFeed is expected to generate 0.6 times more return on investment than Netcapital. However, BuzzFeed is 1.67 times less risky than Netcapital. It trades about 0.44 of its potential returns per unit of risk. Netcapital is currently generating about 0.08 per unit of risk. If you would invest 12.00 in BuzzFeed on September 2, 2024 and sell it today you would earn a total of 16.00 from holding BuzzFeed or generate 133.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 47.62% |
| Values | Daily Returns |
BuzzFeed vs. Netcapital
Performance |
| Timeline |
| BuzzFeed |
| Netcapital |
BuzzFeed and Netcapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BuzzFeed and Netcapital
The main advantage of trading using opposite BuzzFeed and Netcapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BuzzFeed position performs unexpectedly, Netcapital 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 Netcapital will offset losses from the drop in Netcapital's long position.The idea behind BuzzFeed and Netcapital 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.| Netcapital vs. Netcapital | Netcapital vs. BuzzFeed | Netcapital vs. Guardforce AI Co | Netcapital vs. SHF Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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