Correlation Between Bagger Daves and World Technology

Can any of the company-specific risk be diversified away by investing in both Bagger Daves and World Technology 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 Bagger Daves and World Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bagger Daves Burger and World Technology Corp, you can compare the effects of market volatilities on Bagger Daves and World Technology 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 Bagger Daves with a short position of World Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and World Technology.

Diversification Opportunities for Bagger Daves and World Technology

-0.44

Correlation Coefficient

Bagger Daves  World Technology

Very good diversification

The 3 months correlation between Bagger and World is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and World Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Technology Corp and Bagger Daves 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 Bagger Daves Burger are associated (or correlated) with World Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Technology Corp has no effect on the direction of Bagger Daves i.e., Bagger Daves and World Technology go up and down completely randomly.

Pair Corralation between Bagger Daves and World Technology

Given the investment horizon of 90 days Bagger Daves Burger is expected to under-perform the World Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bagger Daves Burger is 2.31 times less risky than World Technology. The pink sheet trades about -0.01 of its potential returns per unit of risk. The World Technology Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in World Technology Corp on September 17, 2024 and sell it today you would earn a total of  0.00  from holding World Technology Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Bagger Daves Burger  vs.  World Technology Corp

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bagger Daves is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

World Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, World Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bagger Daves and World Technology

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

The idea behind Bagger Daves Burger and World Technology 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.