Correlation Between WW International and Regis Common

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

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

Diversification Opportunities for WW International and Regis Common

0.4

Correlation Coefficient

WW International  Regis Common

Very weak diversification

The 3 months correlation between WW International and Regis is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding WW International and Regis Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Common and WW 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 WW International are associated (or correlated) with Regis Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Common has no effect on the direction of WW International i.e., WW International and Regis Common go up and down completely randomly.

Pair Corralation between WW International and Regis Common

Allowing for the 90-day total investment horizon WW International is expected to generate 119.28 times less return on investment than Regis Common. But when comparing it to its historical volatility, WW International is 5.64 times less risky than Regis Common. It trades about 0.0 of its potential returns per unit of risk. Regis Common is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,480  in Regis Common on August 19, 2024 and sell it today you would lose (744.00) from holding Regis Common or give up 30.0% of portfolio value over 90 days.

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

WW International  vs.  Regis Common

WW International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WW International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, WW International may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Regis Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regis Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with WW International and Regis Common

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

The idea behind WW International and Regis Common 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.