Correlation Between 361 Global and Wpg Partners

Can any of the company-specific risk be diversified away by investing in both 361 Global and Wpg Partners 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 361 Global and Wpg Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 361 Global Longshort and Wpg Partners Smallmicro, you can compare the effects of market volatilities on 361 Global and Wpg Partners 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 361 Global with a short position of Wpg Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of 361 Global and Wpg Partners.

Diversification Opportunities for 361 Global and Wpg Partners

0.56

Correlation Coefficient

361 Global  Wpg Partners

Very weak diversification

The 3 months correlation between 361 and Wpg is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding 361 Global Longshort and Wpg Partners Smallmicro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wpg Partners Smallmicro and 361 Global 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 361 Global Longshort are associated (or correlated) with Wpg Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wpg Partners Smallmicro has no effect on the direction of 361 Global i.e., 361 Global and Wpg Partners go up and down completely randomly.

Pair Corralation between 361 Global and Wpg Partners

Assuming the 90 days horizon 361 Global is expected to generate 7.37 times less return on investment than Wpg Partners. But when comparing it to its historical volatility, 361 Global Longshort is 2.19 times less risky than Wpg Partners. It trades about 0.04 of its potential returns per unit of risk. Wpg Partners Smallmicro is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,050  in Wpg Partners Smallmicro on September 4, 2024 and sell it today you would earn a total of  151.00  from holding Wpg Partners Smallmicro or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

361 Global Longshort  vs.  Wpg Partners Smallmicro

361 Global Longshort

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 361 Global Longshort are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 361 Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wpg Partners Smallmicro

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wpg Partners Smallmicro are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wpg Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 361 Global and Wpg Partners

The main advantage of trading using opposite 361 Global and Wpg Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 361 Global position performs unexpectedly, Wpg Partners 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 Wpg Partners will offset losses from the drop in Wpg Partners' long position.

The idea behind 361 Global Longshort and Wpg Partners Smallmicro 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.