Correlation Between Pudgy Penguins and WTC

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

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

Diversification Opportunities for Pudgy Penguins and WTC

-0.51

Correlation Coefficient

Pudgy Penguins  WTC

Excellent diversification

The 3 months correlation between Pudgy and WTC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pudgy Penguins and WTC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WTC and Pudgy Penguins 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 Pudgy Penguins are associated (or correlated) with WTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WTC has no effect on the direction of Pudgy Penguins i.e., Pudgy Penguins and WTC go up and down completely randomly.

Pair Corralation between Pudgy Penguins and WTC

Assuming the 90 days trading horizon Pudgy Penguins is expected to generate 0.96 times more return on investment than WTC. However, Pudgy Penguins is 1.05 times less risky than WTC. It trades about 0.27 of its potential returns per unit of risk. WTC is currently generating about -0.12 per unit of risk. If you would invest  0.86  in Pudgy Penguins on April 24, 2025 and sell it today you would earn a total of  3.38  from holding Pudgy Penguins or generate 390.74% return on investment over 90 days.

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

Pudgy Penguins  vs.  WTC

Pudgy Penguins

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pudgy Penguins are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Pudgy Penguins exhibited solid returns over the last few months and may actually be approaching a breakup point.

WTC

Risk-Adjusted Performance

Very Weak

Over the last 90 days WTC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for WTC shareholders.

Pair Trading with Pudgy Penguins and WTC

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

The idea behind Pudgy Penguins and WTC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.