Correlation Between OFFICIAL TRUMP and Kava

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

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

Diversification Opportunities for OFFICIAL TRUMP and Kava

0.68

Correlation Coefficient

OFFICIAL TRUMP  Kava

Poor diversification

The 3 months correlation between OFFICIAL and Kava is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding OFFICIAL TRUMP and Kava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kava and OFFICIAL TRUMP 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 OFFICIAL TRUMP are associated (or correlated) with Kava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kava has no effect on the direction of OFFICIAL TRUMP i.e., OFFICIAL TRUMP and Kava go up and down completely randomly.

Pair Corralation between OFFICIAL TRUMP and Kava

Assuming the 90 days trading horizon OFFICIAL TRUMP is expected to under-perform the Kava. In addition to that, OFFICIAL TRUMP is 1.72 times more volatile than Kava. It trades about -0.02 of its total potential returns per unit of risk. Kava is currently generating about 0.0 per unit of volatility. If you would invest  45.00  in Kava on April 23, 2025 and sell it today you would lose (2.00) from holding Kava or give up 4.44% of portfolio value over 90 days.

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

OFFICIAL TRUMP  vs.  Kava

OFFICIAL TRUMP

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFFICIAL TRUMP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, OFFICIAL TRUMP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kava

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kava has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kava is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OFFICIAL TRUMP and Kava

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

The idea behind OFFICIAL TRUMP and Kava 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.