Correlation Between Wex and Biotage AB
Can any of the company-specific risk be diversified away by investing in both Wex and Biotage AB 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 Wex and Biotage AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Biotage AB, you can compare the effects of market volatilities on Wex and Biotage AB 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 Wex with a short position of Biotage AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Biotage AB.
Diversification Opportunities for Wex and Biotage AB
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wex and Biotage is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Biotage AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotage AB and Wex 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 Wex Inc are associated (or correlated) with Biotage AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotage AB has no effect on the direction of Wex i.e., Wex and Biotage AB go up and down completely randomly.
Pair Corralation between Wex and Biotage AB
Considering the 90-day investment horizon Wex is expected to generate 1.68 times less return on investment than Biotage AB. But when comparing it to its historical volatility, Wex Inc is 3.13 times less risky than Biotage AB. It trades about 0.24 of its potential returns per unit of risk. Biotage AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 980.00 in Biotage AB on January 25, 2024 and sell it today you would earn a total of 707.00 from holding Biotage AB or generate 72.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Wex Inc vs. Biotage AB
Performance |
| Timeline |
| Wex Inc |
| Biotage AB |
Wex and Biotage AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and Biotage AB
The main advantage of trading using opposite Wex and Biotage AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, Biotage AB 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 Biotage AB will offset losses from the drop in Biotage AB's long position.| Wex vs. CSG Systems International | Wex vs. Squarespace | Wex vs. VeriSign | Wex vs. Consensus Cloud Solutions |
| Biotage AB vs. ProSiebenSat1 Media AG | Biotage AB vs. iHeartMedia | Biotage AB vs. ITV PLC ADR | Biotage AB vs. Walt Disney |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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