Correlation Between UPS CDR and WildBrain

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

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

Diversification Opportunities for UPS CDR and WildBrain

-0.7

Correlation Coefficient

UPS CDR  WildBrain

Excellent diversification

The 3 months correlation between UPS and WildBrain is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain and UPS CDR 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 UPS CDR are associated (or correlated) with WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of UPS CDR i.e., UPS CDR and WildBrain go up and down completely randomly.

Pair Corralation between UPS CDR and WildBrain

Assuming the 90 days trading horizon UPS CDR is expected to generate 0.38 times more return on investment than WildBrain. However, UPS CDR is 2.65 times less risky than WildBrain. It trades about 0.09 of its potential returns per unit of risk. WildBrain is currently generating about -0.1 per unit of risk. If you would invest  1,656  in UPS CDR on September 3, 2024 and sell it today you would earn a total of  135.00  from holding UPS CDR or generate 8.15% return on investment over 90 days.

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

UPS CDR  vs.  WildBrain

UPS CDR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UPS CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, UPS CDR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WildBrain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WildBrain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with UPS CDR and WildBrain

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

The idea behind UPS CDR and WildBrain 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 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.