Correlation Between Dave Busters and WISCONSIN

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

Diversification Opportunities for Dave Busters and WISCONSIN

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Dave and WISCONSIN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and WISCONSIN ELEC PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISCONSIN ELEC PWR and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with WISCONSIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISCONSIN ELEC PWR has no effect on the direction of Dave Busters i.e., Dave Busters and WISCONSIN go up and down completely randomly.

Pair Corralation between Dave Busters and WISCONSIN

Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 1.53 times more return on investment than WISCONSIN. However, Dave Busters is 1.53 times more volatile than WISCONSIN ELEC PWR. It trades about -0.15 of its potential returns per unit of risk. WISCONSIN ELEC PWR is currently generating about -0.29 per unit of risk. If you would invest  2,982  in Dave Busters Entertainment on October 25, 2024 and sell it today you would lose (309.00) from holding Dave Busters Entertainment or give up 10.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy44.44%
ValuesDaily Returns

Dave Busters Entertainment  vs.  WISCONSIN ELEC PWR

 Performance 
       Timeline  
Dave Busters Enterta 

Risk-Adjusted Performance

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Weak
 
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Very Weak
Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
WISCONSIN ELEC PWR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WISCONSIN ELEC PWR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for WISCONSIN ELEC PWR investors.

Dave Busters and WISCONSIN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dave Busters and WISCONSIN

The main advantage of trading using opposite Dave Busters and WISCONSIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, WISCONSIN 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 WISCONSIN will offset losses from the drop in WISCONSIN's long position.
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The idea behind Dave Busters Entertainment and WISCONSIN ELEC PWR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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