Correlation Between DGB and WAB
Can any of the company-specific risk be diversified away by investing in both DGB and WAB 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 DGB and WAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DGB and WAB, you can compare the effects of market volatilities on DGB and WAB 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 DGB with a short position of WAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGB and WAB.
Diversification Opportunities for DGB and WAB
Average diversification
The 3 months correlation between DGB and WAB is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding DGB and WAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WAB and DGB 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 DGB are associated (or correlated) with WAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WAB has no effect on the direction of DGB i.e., DGB and WAB go up and down completely randomly.
Pair Corralation between DGB and WAB
If you would invest 0.63 in DGB on August 23, 2024 and sell it today you would earn a total of 0.49 from holding DGB or generate 76.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
DGB vs. WAB
Performance |
| Timeline |
| DGB |
| WAB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DGB and WAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DGB and WAB
The main advantage of trading using opposite DGB and WAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DGB position performs unexpectedly, WAB 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 WAB will offset losses from the drop in WAB's long position.The idea behind DGB and WAB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |