Correlation Between Digital World and Symbotic
Can any of the company-specific risk be diversified away by investing in both Digital World and Symbotic 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 Digital World and Symbotic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital World Acquisition and Symbotic, you can compare the effects of market volatilities on Digital World and Symbotic 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 Digital World with a short position of Symbotic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital World and Symbotic.
Diversification Opportunities for Digital World and Symbotic
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and Symbotic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Digital World Acquisition and Symbotic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symbotic and Digital World 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 Digital World Acquisition are associated (or correlated) with Symbotic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symbotic has no effect on the direction of Digital World i.e., Digital World and Symbotic go up and down completely randomly.
Pair Corralation between Digital World and Symbotic
Assuming the 90 days horizon Digital World is expected to generate 3.58 times less return on investment than Symbotic. In addition to that, Digital World is 1.03 times more volatile than Symbotic. It trades about 0.02 of its total potential returns per unit of risk. Symbotic is currently generating about 0.06 per unit of volatility. If you would invest 1,146 in Symbotic on September 3, 2024 and sell it today you would earn a total of 1,544 from holding Symbotic or generate 134.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.91% |
| Values | Daily Returns |
Digital World Acquisition vs. Symbotic
Performance |
| Timeline |
| Digital World Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Symbotic |
Digital World and Symbotic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital World and Symbotic
The main advantage of trading using opposite Digital World and Symbotic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital World position performs unexpectedly, Symbotic 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 Symbotic will offset losses from the drop in Symbotic's long position.The idea behind Digital World Acquisition and Symbotic 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.| Symbotic vs. Parker Hannifin | Symbotic vs. SPACE | Symbotic vs. Bayview Acquisition Corp | Symbotic vs. T Rowe Price |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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