Correlation Between Worldcoin and BAX

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

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

Diversification Opportunities for Worldcoin and BAX

0.62

Correlation Coefficient

Worldcoin  BAX

Poor diversification

The 3 months correlation between Worldcoin and BAX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Worldcoin and BAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAX and Worldcoin 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 Worldcoin are associated (or correlated) with BAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAX has no effect on the direction of Worldcoin i.e., Worldcoin and BAX go up and down completely randomly.

Pair Corralation between Worldcoin and BAX

Assuming the 90 days trading horizon Worldcoin is expected to generate 1.58 times less return on investment than BAX. But when comparing it to its historical volatility, Worldcoin is 2.39 times less risky than BAX. It trades about 0.23 of its potential returns per unit of risk. BAX is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.00  in BAX on September 2, 2024 and sell it today you would earn a total of  0.01  from holding BAX or generate 131.25% return on investment over 90 days.

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

Worldcoin  vs.  BAX

Worldcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Worldcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Worldcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

BAX

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BAX are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BAX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worldcoin and BAX

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

The idea behind Worldcoin and BAX 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.