Correlation Between ABACUS STORAGE and Wam Leaders
Can any of the company-specific risk be diversified away by investing in both ABACUS STORAGE and Wam Leaders 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 ABACUS STORAGE and Wam Leaders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABACUS STORAGE KING and Wam Leaders, you can compare the effects of market volatilities on ABACUS STORAGE and Wam Leaders 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 ABACUS STORAGE with a short position of Wam Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Wam Leaders.
Diversification Opportunities for ABACUS STORAGE and Wam Leaders
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABACUS and Wam is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Wam Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Leaders has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Wam Leaders go up and down completely randomly.
Pair Corralation between ABACUS STORAGE and Wam Leaders
Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to generate 1.19 times more return on investment than Wam Leaders. However, ABACUS STORAGE is 1.19 times more volatile than Wam Leaders. It trades about -0.12 of its potential returns per unit of risk. Wam Leaders is currently generating about -0.24 per unit of risk. If you would invest 125.00 in ABACUS STORAGE KING on September 1, 2024 and sell it today you would lose (4.00) from holding ABACUS STORAGE KING or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ABACUS STORAGE KING vs. Wam Leaders
Performance |
| Timeline |
| ABACUS STORAGE KING |
| Wam Leaders |
ABACUS STORAGE and Wam Leaders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABACUS STORAGE and Wam Leaders
The main advantage of trading using opposite ABACUS STORAGE and Wam Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE position performs unexpectedly, Wam Leaders 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 Leaders will offset losses from the drop in Wam Leaders' long position.| ABACUS STORAGE vs. Westpac Banking | ABACUS STORAGE vs. Odyssey Energy | ABACUS STORAGE vs. Imricor Medical Systems | ABACUS STORAGE vs. Midway |
| Wam Leaders vs. ABACUS STORAGE KING | Wam Leaders vs. Navigator Global Investments | Wam Leaders vs. Legacy Iron Ore | Wam Leaders vs. Tombador Iron |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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