Correlation Between Cboe Global and KRISPY KREME

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

By analyzing existing cross correlation between Cboe Global Markets and KRISPY KREME DL 01, you can compare the effects of market volatilities on Cboe Global and KRISPY KREME 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 Cboe Global with a short position of KRISPY KREME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cboe Global and KRISPY KREME.

Diversification Opportunities for Cboe Global and KRISPY KREME

0.21

Correlation Coefficient

Cboe Global  KRISPY KREME

Modest diversification

The 3 months correlation between Cboe and KRISPY is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cboe Global Markets and KRISPY KREME DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRISPY KREME DL and Cboe 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 Cboe Global Markets are associated (or correlated) with KRISPY KREME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRISPY KREME DL has no effect on the direction of Cboe Global i.e., Cboe Global and KRISPY KREME go up and down completely randomly.

Pair Corralation between Cboe Global and KRISPY KREME

Assuming the 90 days horizon Cboe Global Markets is expected to generate 1.3 times more return on investment than KRISPY KREME. However, Cboe Global is 1.3 times more volatile than KRISPY KREME DL 01. It trades about 0.01 of its potential returns per unit of risk. KRISPY KREME DL 01 is currently generating about -0.41 per unit of risk. If you would invest  18,789  in Cboe Global Markets on September 19, 2024 and sell it today you would earn a total of  11.00  from holding Cboe Global Markets or generate 0.06% return on investment over 90 days.

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

Cboe Global Markets  vs.  KRISPY KREME DL 01

Cboe Global Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cboe Global Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cboe Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cboe Global and KRISPY KREME

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

The idea behind Cboe Global Markets and KRISPY KREME DL 01 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.