Correlation Between Netcapital and BuzzFeed
Can any of the company-specific risk be diversified away by investing in both Netcapital and BuzzFeed 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 Netcapital and BuzzFeed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netcapital and BuzzFeed, you can compare the effects of market volatilities on Netcapital and BuzzFeed 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 Netcapital with a short position of BuzzFeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netcapital and BuzzFeed.
Diversification Opportunities for Netcapital and BuzzFeed
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Netcapital and BuzzFeed is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed and Netcapital 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 Netcapital are associated (or correlated) with BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of Netcapital i.e., Netcapital and BuzzFeed go up and down completely randomly.
Pair Corralation between Netcapital and BuzzFeed
Given the investment horizon of 90 days Netcapital is expected to under-perform the BuzzFeed. In addition to that, Netcapital is 1.26 times more volatile than BuzzFeed. It trades about -0.24 of its total potential returns per unit of risk. BuzzFeed is currently generating about 0.13 per unit of volatility. If you would invest 9.00 in BuzzFeed on June 29, 2024 and sell it today you would earn a total of 1.50 from holding BuzzFeed or generate 16.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Netcapital vs. BuzzFeed
Performance |
Timeline |
Netcapital |
BuzzFeed |
Netcapital and BuzzFeed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netcapital and BuzzFeed
The main advantage of trading using opposite Netcapital and BuzzFeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcapital position performs unexpectedly, BuzzFeed 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 BuzzFeed will offset losses from the drop in BuzzFeed's long position.Netcapital vs. BuzzFeed | Netcapital vs. Guardforce AI Co | Netcapital vs. HUMANA INC | Netcapital vs. Aquagold International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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