Correlation Between Wise Group and NGS Group
Can any of the company-specific risk be diversified away by investing in both Wise Group and NGS Group 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 Wise Group and NGS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wise Group AB and NGS Group AB, you can compare the effects of market volatilities on Wise Group and NGS Group 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 Wise Group with a short position of NGS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wise Group and NGS Group.
Diversification Opportunities for Wise Group and NGS Group
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wise and NGS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wise Group AB and NGS Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGS Group AB and Wise Group 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 Wise Group AB are associated (or correlated) with NGS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGS Group AB has no effect on the direction of Wise Group i.e., Wise Group and NGS Group go up and down completely randomly.
Pair Corralation between Wise Group and NGS Group
Assuming the 90 days trading horizon Wise Group AB is expected to generate 0.92 times more return on investment than NGS Group. However, Wise Group AB is 1.09 times less risky than NGS Group. It trades about 0.15 of its potential returns per unit of risk. NGS Group AB is currently generating about -0.05 per unit of risk. If you would invest 2,340 in Wise Group AB on January 20, 2024 and sell it today you would earn a total of 240.00 from holding Wise Group AB or generate 10.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wise Group AB vs. NGS Group AB
Performance |
Timeline |
Wise Group AB |
NGS Group AB |
Wise Group and NGS Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wise Group and NGS Group
The main advantage of trading using opposite Wise Group and NGS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wise Group position performs unexpectedly, NGS Group 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 NGS Group will offset losses from the drop in NGS Group's long position.Wise Group vs. Online Brands Nordic | Wise Group vs. Clean Motion AB | Wise Group vs. Nilsson Special Vehicles |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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