Correlation Between WW International and Rover

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

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

Diversification Opportunities for WW International and Rover

0.44

Correlation Coefficient

WW International  Rover

Very weak diversification

The 3 months correlation between WW International and Rover is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding WW International and Rover Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rover Group and WW International 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 WW International are associated (or correlated) with Rover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rover Group has no effect on the direction of WW International i.e., WW International and Rover go up and down completely randomly.

Pair Corralation between WW International and Rover

If you would invest  81.00  in WW International on September 19, 2024 and sell it today you would earn a total of  63.00  from holding WW International or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

WW International  vs.  Rover Group

WW International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WW International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, WW International showed solid returns over the last few months and may actually be approaching a breakup point.

Rover Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rover Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Rover is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WW International and Rover

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

The idea behind WW International and Rover Group 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.