Correlation Between Investment Friends and New Tech
Can any of the company-specific risk be diversified away by investing in both Investment Friends and New Tech 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 Investment Friends and New Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Friends Capital and New Tech Venture, you can compare the effects of market volatilities on Investment Friends and New Tech 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 Investment Friends with a short position of New Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Friends and New Tech.
Diversification Opportunities for Investment Friends and New Tech
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Investment and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investment Friends Capital and New Tech Venture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Venture and Investment Friends 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 Investment Friends Capital are associated (or correlated) with New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Venture has no effect on the direction of Investment Friends i.e., Investment Friends and New Tech go up and down completely randomly.
Pair Corralation between Investment Friends and New Tech
If you would invest 11.00 in New Tech Venture on October 23, 2024 and sell it today you would earn a total of 1.00 from holding New Tech Venture or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 86.67% |
| Values | Daily Returns |
Investment Friends Capital vs. New Tech Venture
Performance |
| Timeline |
| Investment Friends |
| New Tech Venture |
Investment Friends and New Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment Friends and New Tech
The main advantage of trading using opposite Investment Friends and New Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Friends position performs unexpectedly, New Tech 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 Tech will offset losses from the drop in New Tech's long position.| Investment Friends vs. LSI Software SA | Investment Friends vs. Skyline Investment SA | Investment Friends vs. Medicofarma Biotech SA | Investment Friends vs. Mercator Medical SA |
| New Tech vs. Mercator Medical SA | New Tech vs. PZ Cormay SA | New Tech vs. Marie Brizard Wine | New Tech vs. Quantum Software SA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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