Correlation Between WM Technology and Elah Holdings
Can any of the company-specific risk be diversified away by investing in both WM Technology and Elah Holdings 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 Elah Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and Elah Holdings, you can compare the effects of market volatilities on WM Technology and Elah Holdings 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 Elah Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Elah Holdings.
Diversification Opportunities for WM Technology and Elah Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAPSW and Elah is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Elah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elah Holdings 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 Elah Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elah Holdings has no effect on the direction of WM Technology i.e., WM Technology and Elah Holdings go up and down completely randomly.
Pair Corralation between WM Technology and Elah Holdings
Assuming the 90 days horizon WM Technology is expected to generate 1.44 times more return on investment than Elah Holdings. However, WM Technology is 1.44 times more volatile than Elah Holdings. It trades about 0.06 of its potential returns per unit of risk. Elah Holdings is currently generating about 0.0 per unit of risk. If you would invest 2.99 in WM Technology on September 16, 2024 and sell it today you would lose (0.01) from holding WM Technology or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WM Technology vs. Elah Holdings
Performance |
| Timeline |
| WM Technology |
| Elah Holdings |
WM Technology and Elah Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and Elah Holdings
The main advantage of trading using opposite WM Technology and Elah Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, Elah Holdings 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 Elah Holdings will offset losses from the drop in Elah Holdings' long position.The idea behind WM Technology and Elah 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.| Elah Holdings vs. Advantage Solutions | Elah Holdings vs. Atlas Corp | Elah Holdings vs. PureCycle Technologies | Elah Holdings vs. WM Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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