Correlation Between Cronos and Wilder World
Can any of the company-specific risk be diversified away by investing in both Cronos and Wilder World 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 Cronos and Wilder World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cronos and Wilder World, you can compare the effects of market volatilities on Cronos and Wilder World 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 Cronos with a short position of Wilder World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cronos and Wilder World.
Diversification Opportunities for Cronos and Wilder World
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cronos and Wilder is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and Wilder World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilder World and Cronos 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 Cronos are associated (or correlated) with Wilder World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilder World has no effect on the direction of Cronos i.e., Cronos and Wilder World go up and down completely randomly.
Pair Corralation between Cronos and Wilder World
Assuming the 90 days trading horizon Cronos is expected to generate 0.96 times more return on investment than Wilder World. However, Cronos is 1.04 times less risky than Wilder World. It trades about 0.06 of its potential returns per unit of risk. Wilder World is currently generating about 0.05 per unit of risk. If you would invest 12.00 in Cronos on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Cronos or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cronos vs. Wilder World
Performance |
| Timeline |
| Cronos |
| Wilder World |
Cronos and Wilder World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cronos and Wilder World
The main advantage of trading using opposite Cronos and Wilder World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cronos position performs unexpectedly, Wilder World 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 Wilder World will offset losses from the drop in Wilder World's long position.The idea behind Cronos and Wilder World 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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