Correlation Between NYSE Composite and Wejo
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Wejo 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 NYSE Composite and Wejo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Wejo Group, you can compare the effects of market volatilities on NYSE Composite and Wejo 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 NYSE Composite with a short position of Wejo. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Wejo.
Diversification Opportunities for NYSE Composite and Wejo
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Wejo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Wejo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wejo Group and NYSE Composite 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 NYSE Composite are associated (or correlated) with Wejo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wejo Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Wejo go up and down completely randomly.
Pair Corralation between NYSE Composite and Wejo
Assuming the 90 days trading horizon NYSE Composite is expected to generate 132.92 times less return on investment than Wejo. But when comparing it to its historical volatility, NYSE Composite is 30.35 times less risky than Wejo. It trades about 0.09 of its potential returns per unit of risk. Wejo Group is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2.17 in Wejo Group on September 12, 2024 and sell it today you would earn a total of 0.63 from holding Wejo Group or generate 29.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 1.14% |
| Values | Daily Returns |
NYSE Composite vs. Wejo Group
Performance |
| Timeline |
NYSE Composite and Wejo Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Wejo Group
Pair trading matchups for Wejo
Pair Trading with NYSE Composite and Wejo
The main advantage of trading using opposite NYSE Composite and Wejo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Wejo 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 Wejo will offset losses from the drop in Wejo's long position.| NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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