Correlation Between Widepoint and Castellum

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

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

Diversification Opportunities for Widepoint and Castellum

0.16

Correlation Coefficient

Widepoint  Castellum

Average diversification

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

Pair Corralation between Widepoint and Castellum

Considering the 90-day investment horizon Widepoint C is expected to generate 0.93 times more return on investment than Castellum. However, Widepoint C is 1.07 times less risky than Castellum. It trades about 0.12 of its potential returns per unit of risk. Castellum is currently generating about 0.07 per unit of risk. If you would invest  377.00  in Widepoint C on September 1, 2024 and sell it today you would earn a total of  131.00  from holding Widepoint C or generate 34.75% return on investment over 90 days.

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

Widepoint C  vs.  Castellum

Widepoint C

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Widepoint C are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Widepoint showed solid returns over the last few months and may actually be approaching a breakup point.

Castellum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Widepoint and Castellum

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

The idea behind Widepoint C and Castellum 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.