Correlation Between New Wave and Sack Lunch
Can any of the company-specific risk be diversified away by investing in both New Wave and Sack Lunch 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 Sack Lunch 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 Sack Lunch Productions, you can compare the effects of market volatilities on New Wave and Sack Lunch 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 Sack Lunch. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Sack Lunch.
Diversification Opportunities for New Wave and Sack Lunch
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Sack is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Holdings and Sack Lunch Productions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sack Lunch Productions 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 Sack Lunch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sack Lunch Productions has no effect on the direction of New Wave i.e., New Wave and Sack Lunch go up and down completely randomly.
Pair Corralation between New Wave and Sack Lunch
Assuming the 90 days horizon New Wave Holdings is expected to generate 1.63 times more return on investment than Sack Lunch. However, New Wave is 1.63 times more volatile than Sack Lunch Productions. It trades about 0.06 of its potential returns per unit of risk. Sack Lunch Productions is currently generating about 0.04 per unit of risk. If you would invest 2.66 in New Wave Holdings on September 2, 2024 and sell it today you would lose (1.45) from holding New Wave Holdings or give up 54.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
New Wave Holdings vs. Sack Lunch Productions
Performance |
| Timeline |
| New Wave Holdings |
| Sack Lunch Productions |
New Wave and Sack Lunch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Sack Lunch
The main advantage of trading using opposite New Wave and Sack Lunch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Sack Lunch 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 Sack Lunch will offset losses from the drop in Sack Lunch's long position.| New Wave vs. ZoomerMedia Limited | New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc |
| Sack Lunch vs. Aerius International | Sack Lunch vs. Potash America | Sack Lunch vs. Blue Diamond Ventures | Sack Lunch vs. Daniels Corporate Advisory |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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