Correlation Between We Buy and Prosus NV
Can any of the company-specific risk be diversified away by investing in both We Buy and Prosus NV 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 We Buy and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between We Buy Cars and Prosus NV, you can compare the effects of market volatilities on We Buy and Prosus NV 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 We Buy with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of We Buy and Prosus NV.
Diversification Opportunities for We Buy and Prosus NV
Weak diversification
The 3 months correlation between WBC and Prosus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding We Buy Cars and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and We Buy 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 We Buy Cars are associated (or correlated) with Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of We Buy i.e., We Buy and Prosus NV go up and down completely randomly.
Pair Corralation between We Buy and Prosus NV
Assuming the 90 days trading horizon We Buy Cars is expected to generate 1.16 times more return on investment than Prosus NV. However, We Buy is 1.16 times more volatile than Prosus NV. It trades about 0.74 of its potential returns per unit of risk. Prosus NV is currently generating about -0.15 per unit of risk. If you would invest 342,500 in We Buy Cars on August 24, 2024 and sell it today you would earn a total of 85,400 from holding We Buy Cars or generate 24.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
We Buy Cars vs. Prosus NV
Performance |
| Timeline |
| We Buy Cars |
| Prosus NV |
We Buy and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with We Buy and Prosus NV
The main advantage of trading using opposite We Buy and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if We Buy position performs unexpectedly, Prosus NV 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 Prosus NV will offset losses from the drop in Prosus NV's long position.| We Buy vs. Trellidor Holdings | We Buy vs. Prosus NV | We Buy vs. Rex Trueform Group | We Buy vs. Gold Fields |
| Prosus NV vs. Astoria Investments | Prosus NV vs. Reinet Investments SCA | Prosus NV vs. Lesaka Technologies | Prosus NV vs. Frontier Transport Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
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| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |