Correlation Between William Blair and Newfound Risk

Can any of the company-specific risk be diversified away by investing in both William Blair and Newfound Risk 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 William Blair and Newfound Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between William Blair Large and Newfound Risk Managed, you can compare the effects of market volatilities on William Blair and Newfound Risk 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 William Blair with a short position of Newfound Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and Newfound Risk.

Diversification Opportunities for William Blair and Newfound Risk

0.0

Correlation Coefficient

William Blair  Newfound Risk

Pay attention - limited upside

The 3 months correlation between WILLIAM and Newfound is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Large and Newfound Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newfound Risk Managed and William Blair 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 William Blair Large are associated (or correlated) with Newfound Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newfound Risk Managed has no effect on the direction of William Blair i.e., William Blair and Newfound Risk go up and down completely randomly.

Pair Corralation between William Blair and Newfound Risk

If you would invest  2,392  in William Blair Large on September 4, 2024 and sell it today you would earn a total of  811.00  from holding William Blair Large or generate 33.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

William Blair Large  vs.  Newfound Risk Managed

William Blair Large

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Large are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Newfound Risk Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newfound Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Newfound Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with William Blair and Newfound Risk

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

The idea behind William Blair Large and Newfound Risk Managed 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.