Correlation Between Australia and Wam Capital
Can any of the company-specific risk be diversified away by investing in both Australia and Wam Capital 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 Australia and Wam Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australia and New and Wam Capital, you can compare the effects of market volatilities on Australia and Wam Capital 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 Australia with a short position of Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australia and Wam Capital.
Diversification Opportunities for Australia and Wam Capital
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australia and Wam is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and Australia 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 Australia and New are associated (or correlated) with Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of Australia i.e., Australia and Wam Capital go up and down completely randomly.
Pair Corralation between Australia and Wam Capital
Assuming the 90 days trading horizon Australia and New is expected to generate 1.05 times more return on investment than Wam Capital. However, Australia is 1.05 times more volatile than Wam Capital. It trades about 0.08 of its potential returns per unit of risk. Wam Capital is currently generating about 0.04 per unit of risk. If you would invest 2,052 in Australia and New on December 4, 2024 and sell it today you would earn a total of 924.00 from holding Australia and New or generate 45.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Australia and New vs. Wam Capital
Performance |
| Timeline |
| Australia and New |
| Wam Capital |
Australia and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australia and Wam Capital
The main advantage of trading using opposite Australia and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australia position performs unexpectedly, Wam Capital 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 Wam Capital will offset losses from the drop in Wam Capital's long position.| Australia vs. Vulcan Steel | Australia vs. Champion Iron | Australia vs. Bailador Technology Invest | Australia vs. Advanced Braking Technology |
| Wam Capital vs. Group 6 Metals | Wam Capital vs. Beston Global Food | Wam Capital vs. Retail Food Group | Wam Capital vs. Ainsworth Game Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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