Correlation Between Wilhelmina and Fiverr International

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

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

Diversification Opportunities for Wilhelmina and Fiverr International

-0.32

Correlation Coefficient

Wilhelmina  Fiverr International

Very good diversification

The 3 months correlation between Wilhelmina and Fiverr is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Fiverr International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiverr International and Wilhelmina 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 Wilhelmina are associated (or correlated) with Fiverr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiverr International has no effect on the direction of Wilhelmina i.e., Wilhelmina and Fiverr International go up and down completely randomly.

Pair Corralation between Wilhelmina and Fiverr International

Given the investment horizon of 90 days Wilhelmina is expected to under-perform the Fiverr International. In addition to that, Wilhelmina is 1.53 times more volatile than Fiverr International. It trades about -0.07 of its total potential returns per unit of risk. Fiverr International is currently generating about 0.15 per unit of volatility. If you would invest  2,487  in Fiverr International on August 30, 2024 and sell it today you would earn a total of  796.00  from holding Fiverr International or generate 32.01% return on investment over 90 days.

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

Wilhelmina  vs.  Fiverr International

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fiverr International

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fiverr International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fiverr International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilhelmina and Fiverr International

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

The idea behind Wilhelmina and Fiverr International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.