Correlation Between KEY and Yield Guild
Can any of the company-specific risk be diversified away by investing in both KEY and Yield Guild 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 KEY and Yield Guild into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEY and Yield Guild Games, you can compare the effects of market volatilities on KEY and Yield Guild 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 KEY with a short position of Yield Guild. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEY and Yield Guild.
Diversification Opportunities for KEY and Yield Guild
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KEY and Yield is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding KEY and Yield Guild Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yield Guild Games and KEY 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 KEY are associated (or correlated) with Yield Guild. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yield Guild Games has no effect on the direction of KEY i.e., KEY and Yield Guild go up and down completely randomly.
Pair Corralation between KEY and Yield Guild
Assuming the 90 days trading horizon KEY is expected to under-perform the Yield Guild. In addition to that, KEY is 1.17 times more volatile than Yield Guild Games. It trades about -0.11 of its total potential returns per unit of risk. Yield Guild Games is currently generating about 0.39 per unit of volatility. If you would invest 41.00 in Yield Guild Games on September 4, 2024 and sell it today you would earn a total of 31.00 from holding Yield Guild Games or generate 75.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEY vs. Yield Guild Games
Performance |
| Timeline |
| KEY |
| Yield Guild Games |
KEY and Yield Guild Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEY and Yield Guild
The main advantage of trading using opposite KEY and Yield Guild positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEY position performs unexpectedly, Yield Guild 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 Yield Guild will offset losses from the drop in Yield Guild's long position.The idea behind KEY and Yield Guild Games 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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