Correlation Between Wise Plc and Northern Bear
Can any of the company-specific risk be diversified away by investing in both Wise Plc and Northern Bear 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 Wise Plc and Northern Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wise plc and Northern Bear Plc, you can compare the effects of market volatilities on Wise Plc and Northern Bear 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 Wise Plc with a short position of Northern Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wise Plc and Northern Bear.
Diversification Opportunities for Wise Plc and Northern Bear
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wise and Northern is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wise plc and Northern Bear Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Bear Plc and Wise Plc 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 Wise plc are associated (or correlated) with Northern Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Bear Plc has no effect on the direction of Wise Plc i.e., Wise Plc and Northern Bear go up and down completely randomly.
Pair Corralation between Wise Plc and Northern Bear
Assuming the 90 days trading horizon Wise plc is expected to generate 0.81 times more return on investment than Northern Bear. However, Wise plc is 1.23 times less risky than Northern Bear. It trades about 0.06 of its potential returns per unit of risk. Northern Bear Plc is currently generating about 0.03 per unit of risk. If you would invest 56,760 in Wise plc on September 19, 2024 and sell it today you would earn a total of 42,340 from holding Wise plc or generate 74.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Wise plc vs. Northern Bear Plc
Performance |
| Timeline |
| Wise plc |
| Northern Bear Plc |
Wise Plc and Northern Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wise Plc and Northern Bear
The main advantage of trading using opposite Wise Plc and Northern Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wise Plc position performs unexpectedly, Northern Bear 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 Northern Bear will offset losses from the drop in Northern Bear's long position.| Wise Plc vs. Broadcom | Wise Plc vs. Mindflair Plc | Wise Plc vs. Delta Air Lines | Wise Plc vs. Odfjell Drilling |
| Northern Bear vs. Summit Materials Cl | Northern Bear vs. Molson Coors Beverage | Northern Bear vs. Axway Software SA | Northern Bear vs. Ecclesiastical Insurance Office |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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