Correlation Between Simply Better and NowVertical
Can any of the company-specific risk be diversified away by investing in both Simply Better and NowVertical 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 Simply Better and NowVertical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Better Brands and NowVertical Group, you can compare the effects of market volatilities on Simply Better and NowVertical 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 Simply Better with a short position of NowVertical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Better and NowVertical.
Diversification Opportunities for Simply Better and NowVertical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simply and NowVertical is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Simply Better Brands and NowVertical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NowVertical Group and Simply Better 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 Simply Better Brands are associated (or correlated) with NowVertical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NowVertical Group has no effect on the direction of Simply Better i.e., Simply Better and NowVertical go up and down completely randomly.
Pair Corralation between Simply Better and NowVertical
Assuming the 90 days trading horizon Simply Better Brands is expected to generate 0.8 times more return on investment than NowVertical. However, Simply Better Brands is 1.25 times less risky than NowVertical. It trades about 0.08 of its potential returns per unit of risk. NowVertical Group is currently generating about 0.01 per unit of risk. If you would invest 28.00 in Simply Better Brands on August 27, 2024 and sell it today you would earn a total of 67.00 from holding Simply Better Brands or generate 239.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Better Brands vs. NowVertical Group
Performance |
| Timeline |
| Simply Better Brands |
| NowVertical Group |
Simply Better and NowVertical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Better and NowVertical
The main advantage of trading using opposite Simply Better and NowVertical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Better position performs unexpectedly, NowVertical 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 NowVertical will offset losses from the drop in NowVertical's long position.| Simply Better vs. NowVertical Group | Simply Better vs. Water Ways Technologies | Simply Better vs. Surge Battery Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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