Correlation Between Banzai International and RenoWorks Software

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

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

Diversification Opportunities for Banzai International and RenoWorks Software

-0.08

Correlation Coefficient

Banzai International  RenoWorks Software

Good diversification

The 3 months correlation between Banzai and RenoWorks is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Banzai International and RenoWorks Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenoWorks Software and Banzai 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 Banzai International are associated (or correlated) with RenoWorks Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenoWorks Software has no effect on the direction of Banzai International i.e., Banzai International and RenoWorks Software go up and down completely randomly.

Pair Corralation between Banzai International and RenoWorks Software

Assuming the 90 days horizon Banzai International is expected to generate 0.68 times more return on investment than RenoWorks Software. However, Banzai International is 1.46 times less risky than RenoWorks Software. It trades about 0.1 of its potential returns per unit of risk. RenoWorks Software is currently generating about 0.06 per unit of risk. If you would invest  5.00  in Banzai International on September 25, 2024 and sell it today you would lose (4.04) from holding Banzai International or give up 80.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.75%
Values	Daily Returns

Banzai International  vs.  RenoWorks Software

Banzai International

Risk-Adjusted Performance

5 of 100

Insignificant

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

RenoWorks Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RenoWorks Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, RenoWorks Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banzai International and RenoWorks Software

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

The idea behind Banzai International and RenoWorks Software 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.