Correlation Between World Technology and Bagger Daves

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

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

Diversification Opportunities for World Technology and Bagger Daves

-0.44

Correlation Coefficient

World Technology  Bagger Daves

Very good diversification

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

Pair Corralation between World Technology and Bagger Daves

Given the investment horizon of 90 days World Technology Corp is expected to generate 2.31 times more return on investment than Bagger Daves. However, World Technology is 2.31 times more volatile than Bagger Daves Burger. It trades about 0.05 of its potential returns per unit of risk. Bagger Daves Burger is currently generating about -0.01 per unit of risk. 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

World Technology Corp  vs.  Bagger Daves Burger

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.

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.

Pair Trading with World Technology and Bagger Daves

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

The idea behind World Technology Corp and Bagger Daves Burger 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 Commodity Directory module to find actively traded commodities issued by global exchanges.