Correlation Between W5 Solutions and MilDef Group
Can any of the company-specific risk be diversified away by investing in both W5 Solutions and MilDef 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 W5 Solutions and MilDef Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W5 Solutions AB and MilDef Group AB, you can compare the effects of market volatilities on W5 Solutions and MilDef 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 W5 Solutions with a short position of MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of W5 Solutions and MilDef Group.
Diversification Opportunities for W5 Solutions and MilDef Group
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between W5 Solutions and MilDef is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding W5 Solutions AB and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group AB and W5 Solutions 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 W5 Solutions AB are associated (or correlated) with MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of W5 Solutions i.e., W5 Solutions and MilDef Group go up and down completely randomly.
Pair Corralation between W5 Solutions and MilDef Group
Assuming the 90 days horizon W5 Solutions AB is expected to under-perform the MilDef Group. In addition to that, W5 Solutions is 1.03 times more volatile than MilDef Group AB. It trades about -0.26 of its total potential returns per unit of risk. MilDef Group AB is currently generating about 0.29 per unit of volatility. If you would invest 8,530 in MilDef Group AB on August 31, 2024 and sell it today you would earn a total of 2,970 from holding MilDef Group AB or generate 34.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.78% |
| Values | Daily Returns |
W5 Solutions AB vs. MilDef Group AB
Performance |
| Timeline |
| W5 Solutions AB |
| MilDef Group AB |
W5 Solutions and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W5 Solutions and MilDef Group
The main advantage of trading using opposite W5 Solutions and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W5 Solutions position performs unexpectedly, MilDef 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 MilDef Group will offset losses from the drop in MilDef Group's long position.The idea behind W5 Solutions AB and MilDef Group AB 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.| MilDef Group vs. Saab AB | MilDef Group vs. CTT Systems AB | MilDef Group vs. W5 Solutions AB | MilDef Group vs. AVTECH Sweden AB |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |