Correlation Between Guild Esports and New Wave
Can any of the company-specific risk be diversified away by investing in both Guild Esports and New Wave 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 Guild Esports and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guild Esports Plc and New Wave Holdings, you can compare the effects of market volatilities on Guild Esports and New Wave 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 Guild Esports with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Esports and New Wave.
Diversification Opportunities for Guild Esports and New Wave
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guild and New is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Guild Esports Plc and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Guild Esports 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 Guild Esports Plc are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Guild Esports i.e., Guild Esports and New Wave go up and down completely randomly.
Pair Corralation between Guild Esports and New Wave
Assuming the 90 days horizon Guild Esports is expected to generate 3.69 times less return on investment than New Wave. But when comparing it to its historical volatility, Guild Esports Plc is 1.73 times less risky than New Wave. It trades about 0.02 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.10 in New Wave Holdings on August 26, 2024 and sell it today you would lose (2.89) from holding New Wave Holdings or give up 70.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guild Esports Plc vs. New Wave Holdings
Performance |
| Timeline |
| Guild Esports Plc |
| New Wave Holdings |
Guild Esports and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guild Esports and New Wave
The main advantage of trading using opposite Guild Esports and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guild Esports position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.The idea behind Guild Esports Plc and New Wave Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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