Correlation Between New Relic and Wex

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Can any of the company-specific risk be diversified away by investing in both New Relic and Wex 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 New Relic and Wex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Relic and Wex Inc, you can compare the effects of market volatilities on New Relic and Wex 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 New Relic with a short position of Wex. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Relic and Wex.

Diversification Opportunities for New Relic and Wex

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between New and Wex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding New Relic and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and New Relic 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 New Relic are associated (or correlated) with Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of New Relic i.e., New Relic and Wex go up and down completely randomly.

Pair Corralation between New Relic and Wex

If you would invest  17,531  in Wex Inc on August 25, 2024 and sell it today you would earn a total of  1,007  from holding Wex Inc or generate 5.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy0.4%
ValuesDaily Returns

New Relic  vs.  Wex Inc

 Performance 
       Timeline  
New Relic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days New Relic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Relic is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Wex Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wex Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Wex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

New Relic and Wex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with New Relic and Wex

The main advantage of trading using opposite New Relic and Wex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Relic position performs unexpectedly, Wex 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 Wex will offset losses from the drop in Wex's long position.
The idea behind New Relic and Wex Inc 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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