Correlation Between WonderFi Technologies and Power Financial
Can any of the company-specific risk be diversified away by investing in both WonderFi Technologies and Power Financial 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 WonderFi Technologies and Power Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WonderFi Technologies and Power Financial Corp, you can compare the effects of market volatilities on WonderFi Technologies and Power Financial 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 WonderFi Technologies with a short position of Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WonderFi Technologies and Power Financial.
Diversification Opportunities for WonderFi Technologies and Power Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WonderFi and Power is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding WonderFi Technologies and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial Corp and WonderFi Technologies 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 WonderFi Technologies are associated (or correlated) with Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of WonderFi Technologies i.e., WonderFi Technologies and Power Financial go up and down completely randomly.
Pair Corralation between WonderFi Technologies and Power Financial
Assuming the 90 days trading horizon WonderFi Technologies is expected to generate 3.13 times more return on investment than Power Financial. However, WonderFi Technologies is 3.13 times more volatile than Power Financial Corp. It trades about 0.29 of its potential returns per unit of risk. Power Financial Corp is currently generating about 0.08 per unit of risk. If you would invest 27.00 in WonderFi Technologies on October 20, 2024 and sell it today you would earn a total of 9.00 from holding WonderFi Technologies or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WonderFi Technologies vs. Power Financial Corp
Performance |
| Timeline |
| WonderFi Technologies |
| Power Financial Corp |
WonderFi Technologies and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WonderFi Technologies and Power Financial
The main advantage of trading using opposite WonderFi Technologies and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WonderFi Technologies position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.The idea behind WonderFi Technologies and Power Financial Corp 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.| Power Financial vs. Northview Residential REIT | Power Financial vs. Wallbridge Mining | Power Financial vs. Auxly Cannabis Group | Power Financial vs. First Mining Gold |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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