Correlation Between Porch and Wag Group
Can any of the company-specific risk be diversified away by investing in both Porch and Wag Group 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 Porch and Wag Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porch Group and Wag Group Co, you can compare the effects of market volatilities on Porch and Wag Group 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 Porch with a short position of Wag Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porch and Wag Group.
Diversification Opportunities for Porch and Wag Group
Pay attention - limited upside
The 3 months correlation between Porch and Wag is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Porch Group and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group and Porch 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 Porch Group are associated (or correlated) with Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Porch i.e., Porch and Wag Group go up and down completely randomly.
Pair Corralation between Porch and Wag Group
Given the investment horizon of 90 days Porch Group is expected to generate 1.38 times more return on investment than Wag Group. However, Porch is 1.38 times more volatile than Wag Group Co. It trades about 0.09 of its potential returns per unit of risk. Wag Group Co is currently generating about -0.15 per unit of risk. If you would invest 205.00 in Porch Group on August 28, 2024 and sell it today you would earn a total of 154.00 from holding Porch Group or generate 75.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porch Group vs. Wag Group Co
Performance |
| Timeline |
| Porch Group |
| Wag Group |
Porch and Wag Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porch and Wag Group
The main advantage of trading using opposite Porch and Wag Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porch position performs unexpectedly, Wag Group 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 Wag Group will offset losses from the drop in Wag Group's long position.The idea behind Porch Group and Wag Group Co 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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