Correlation Between Wrap Technologies and Red Cat
Can any of the company-specific risk be diversified away by investing in both Wrap Technologies and Red Cat 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 Wrap Technologies and Red Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrap Technologies and Red Cat Holdings, you can compare the effects of market volatilities on Wrap Technologies and Red Cat 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 Wrap Technologies with a short position of Red Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrap Technologies and Red Cat.
Diversification Opportunities for Wrap Technologies and Red Cat
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wrap and Red is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wrap Technologies and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings and Wrap 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 Wrap Technologies are associated (or correlated) with Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Wrap Technologies i.e., Wrap Technologies and Red Cat go up and down completely randomly.
Pair Corralation between Wrap Technologies and Red Cat
Given the investment horizon of 90 days Wrap Technologies is expected to generate 0.5 times more return on investment than Red Cat. However, Wrap Technologies is 1.99 times less risky than Red Cat. It trades about -0.02 of its potential returns per unit of risk. Red Cat Holdings is currently generating about -0.02 per unit of risk. If you would invest 211.00 in Wrap Technologies on November 9, 2024 and sell it today you would lose (8.00) from holding Wrap Technologies or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrap Technologies vs. Red Cat Holdings
Performance |
| Timeline |
| Wrap Technologies |
| Red Cat Holdings |
Wrap Technologies and Red Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrap Technologies and Red Cat
The main advantage of trading using opposite Wrap Technologies and Red Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrap Technologies position performs unexpectedly, Red Cat 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 Red Cat will offset losses from the drop in Red Cat's long position.| Wrap Technologies vs. Red Cat Holdings | Wrap Technologies vs. WiSA Technologies | Wrap Technologies vs. VerifyMe | Wrap Technologies vs. Oblong Inc |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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