Correlation Between New Wave and Maxx Sports
Can any of the company-specific risk be diversified away by investing in both New Wave and Maxx Sports 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 Wave and Maxx Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Holdings and Maxx Sports TV, you can compare the effects of market volatilities on New Wave and Maxx Sports 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 Wave with a short position of Maxx Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Maxx Sports.
Diversification Opportunities for New Wave and Maxx Sports
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Maxx is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Holdings and Maxx Sports TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxx Sports TV and New Wave 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 Wave Holdings are associated (or correlated) with Maxx Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxx Sports TV has no effect on the direction of New Wave i.e., New Wave and Maxx Sports go up and down completely randomly.
Pair Corralation between New Wave and Maxx Sports
Assuming the 90 days horizon New Wave Holdings is expected to generate 1.62 times more return on investment than Maxx Sports. However, New Wave is 1.62 times more volatile than Maxx Sports TV. It trades about 0.13 of its potential returns per unit of risk. Maxx Sports TV is currently generating about -0.22 per unit of risk. If you would invest 0.98 in New Wave Holdings on August 28, 2024 and sell it today you would earn a total of 0.23 from holding New Wave Holdings or generate 23.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Wave Holdings vs. Maxx Sports TV
Performance |
| Timeline |
| New Wave Holdings |
| Maxx Sports TV |
New Wave and Maxx Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Maxx Sports
The main advantage of trading using opposite New Wave and Maxx Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Maxx Sports 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 Maxx Sports will offset losses from the drop in Maxx Sports' long position.| New Wave vs. ZoomerMedia Limited | New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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