Correlation Between WM Technology and Bravada Gold

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

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

Diversification Opportunities for WM Technology and Bravada Gold

-0.16

Correlation Coefficient

WM Technology  Bravada Gold

Good diversification

The 3 months correlation between MAPSW and Bravada is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and WM 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 WM Technology are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of WM Technology i.e., WM Technology and Bravada Gold go up and down completely randomly.

Pair Corralation between WM Technology and Bravada Gold

Assuming the 90 days horizon WM Technology is expected to generate 0.94 times more return on investment than Bravada Gold. However, WM Technology is 1.06 times less risky than Bravada Gold. It trades about 0.05 of its potential returns per unit of risk. Bravada Gold is currently generating about 0.0 per unit of risk. If you would invest  3.58  in WM Technology on September 13, 2024 and sell it today you would lose (0.54) from holding WM Technology or give up 15.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

WM Technology  vs.  Bravada Gold

WM Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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

Bravada Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with WM Technology and Bravada Gold

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

The idea behind WM Technology and Bravada Gold 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 CEOs Directory module to screen CEOs from public companies around the world.