Correlation Between Winmark and Betterware

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

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

Diversification Opportunities for Winmark and Betterware

-0.75

Correlation Coefficient

Winmark  Betterware

Pay attention - limited upside

The 3 months correlation between Winmark and Betterware is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Betterware De Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware De Mexico and Winmark 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 Winmark are associated (or correlated) with Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware De Mexico has no effect on the direction of Winmark i.e., Winmark and Betterware go up and down completely randomly.

Pair Corralation between Winmark and Betterware

Given the investment horizon of 90 days Winmark is expected to under-perform the Betterware. But the stock apears to be less risky and, when comparing its historical volatility, Winmark is 2.05 times less risky than Betterware. The stock trades about -0.06 of its potential returns per unit of risk. The Betterware De Mexico is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,369  in Betterware De Mexico on February 22, 2024 and sell it today you would earn a total of  316.00  from holding Betterware De Mexico or generate 23.08% return on investment over 90 days.

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

Winmark  vs.  Betterware De Mexico

Winmark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Winmark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Betterware De Mexico

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betterware De Mexico are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Betterware showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winmark and Betterware

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

The idea behind Winmark and Betterware De Mexico 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.