Correlation Between Waterdrop ADR and Fundamental Global
Can any of the company-specific risk be diversified away by investing in both Waterdrop ADR and Fundamental Global 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 Waterdrop ADR and Fundamental Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterdrop ADR and Fundamental Global, you can compare the effects of market volatilities on Waterdrop ADR and Fundamental Global 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 Waterdrop ADR with a short position of Fundamental Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterdrop ADR and Fundamental Global.
Diversification Opportunities for Waterdrop ADR and Fundamental Global
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Waterdrop and Fundamental is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Waterdrop ADR and Fundamental Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Global and Waterdrop ADR 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 Waterdrop ADR are associated (or correlated) with Fundamental Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Global has no effect on the direction of Waterdrop ADR i.e., Waterdrop ADR and Fundamental Global go up and down completely randomly.
Pair Corralation between Waterdrop ADR and Fundamental Global
Considering the 90-day investment horizon Waterdrop ADR is expected to under-perform the Fundamental Global. But the stock apears to be less risky and, when comparing its historical volatility, Waterdrop ADR is 6.93 times less risky than Fundamental Global. The stock trades about -0.03 of its potential returns per unit of risk. The Fundamental Global is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,400 in Fundamental Global on August 24, 2024 and sell it today you would earn a total of 700.00 from holding Fundamental Global or generate 29.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterdrop ADR vs. Fundamental Global
Performance |
| Timeline |
| Waterdrop ADR |
| Fundamental Global |
Waterdrop ADR and Fundamental Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterdrop ADR and Fundamental Global
The main advantage of trading using opposite Waterdrop ADR and Fundamental Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterdrop ADR position performs unexpectedly, Fundamental Global 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 Fundamental Global will offset losses from the drop in Fundamental Global's long position.| Waterdrop ADR vs. Enstar Group Limited | Waterdrop ADR vs. Goosehead Insurance | Waterdrop ADR vs. Axa Equitable Holdings | Waterdrop ADR vs. Fundamental Global |
| Fundamental Global vs. Global Indemnity PLC | Fundamental Global vs. Erie Indemnity | Fundamental Global vs. AMERISAFE | Fundamental Global vs. Diamond Hill Investment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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