Correlation Between Alternative Investment and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Alternative Investment and Whitehaven Coal 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 Alternative Investment and Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Investment Trust and Whitehaven Coal, you can compare the effects of market volatilities on Alternative Investment and Whitehaven Coal 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 Alternative Investment with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Whitehaven Coal.
Diversification Opportunities for Alternative Investment and Whitehaven Coal
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alternative and Whitehaven is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Whitehaven Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Alternative Investment i.e., Alternative Investment and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Alternative Investment and Whitehaven Coal
Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 0.8 times more return on investment than Whitehaven Coal. However, Alternative Investment Trust is 1.25 times less risky than Whitehaven Coal. It trades about 0.15 of its potential returns per unit of risk. Whitehaven Coal is currently generating about -0.05 per unit of risk. If you would invest 140.00 in Alternative Investment Trust on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Alternative Investment Trust or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Investment Trust vs. Whitehaven Coal
Performance |
| Timeline |
| Alternative Investment |
| Whitehaven Coal |
Alternative Investment and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and Whitehaven Coal
The main advantage of trading using opposite Alternative Investment and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Alternative Investment vs. Aneka Tambang Tbk | Alternative Investment vs. BHP Group Limited | Alternative Investment vs. Ecofibre | Alternative Investment vs. iShares Global Healthcare |
| Whitehaven Coal vs. Regis Healthcare | Whitehaven Coal vs. Dicker Data | Whitehaven Coal vs. Iron Road | Whitehaven Coal vs. Bluescope Steel |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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