Correlation Between AXP Energy and Wam Capital
Can any of the company-specific risk be diversified away by investing in both AXP Energy 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 AXP Energy and Wam Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXP Energy Limited and Wam Capital, you can compare the effects of market volatilities on AXP Energy 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 AXP Energy with a short position of Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXP Energy and Wam Capital.
Diversification Opportunities for AXP Energy and Wam Capital
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AXP and Wam is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AXP Energy Limited and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and AXP Energy 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 AXP Energy Limited 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 AXP Energy i.e., AXP Energy and Wam Capital go up and down completely randomly.
Pair Corralation between AXP Energy and Wam Capital
If you would invest 154.00 in Wam Capital on October 21, 2024 and sell it today you would earn a total of 5.00 from holding Wam Capital or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXP Energy Limited vs. Wam Capital
Performance |
| Timeline |
| AXP Energy Limited |
| Wam Capital |
AXP Energy and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXP Energy and Wam Capital
The main advantage of trading using opposite AXP Energy and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXP Energy 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.| AXP Energy vs. Westpac Banking | AXP Energy vs. ABACUS STORAGE KING | AXP Energy vs. Odyssey Energy | AXP Energy vs. SEVEN GROUP HOLDINGS |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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