Correlation Between WM Technology and Allegiant Gold
Can any of the company-specific risk be diversified away by investing in both WM Technology and Allegiant Gold 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 WM Technology and Allegiant Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and Allegiant Gold, you can compare the effects of market volatilities on WM Technology and Allegiant Gold 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 WM Technology with a short position of Allegiant Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Allegiant Gold.
Diversification Opportunities for WM Technology and Allegiant Gold
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAPSW and Allegiant is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold and WM Technology 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 WM Technology are associated (or correlated) with Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of WM Technology i.e., WM Technology and Allegiant Gold go up and down completely randomly.
Pair Corralation between WM Technology and Allegiant Gold
Assuming the 90 days horizon WM Technology is expected to generate 2.04 times more return on investment than Allegiant Gold. However, WM Technology is 2.04 times more volatile than Allegiant Gold. It trades about 0.3 of its potential returns per unit of risk. Allegiant Gold is currently generating about -0.2 per unit of risk. If you would invest 2.01 in WM Technology on September 1, 2024 and sell it today you would earn a total of 2.00 from holding WM Technology or generate 99.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
WM Technology vs. Allegiant Gold
Performance |
| Timeline |
| WM Technology |
| Allegiant Gold |
WM Technology and Allegiant Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and Allegiant Gold
The main advantage of trading using opposite WM Technology and Allegiant Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, Allegiant Gold 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 Allegiant Gold will offset losses from the drop in Allegiant Gold's long position.The idea behind WM Technology and Allegiant Gold 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.| Allegiant Gold vs. South32 Limited | Allegiant Gold vs. NioCorp Developments Ltd | Allegiant Gold vs. HUMANA INC | Allegiant Gold vs. SCOR PK |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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