Correlation Between Brambles and Wilhelmina
Can any of the company-specific risk be diversified away by investing in both Brambles and Wilhelmina 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 Brambles and Wilhelmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brambles Ltd ADR and Wilhelmina, you can compare the effects of market volatilities on Brambles and Wilhelmina 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 Brambles with a short position of Wilhelmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brambles and Wilhelmina.
Diversification Opportunities for Brambles and Wilhelmina
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brambles and Wilhelmina is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brambles Ltd ADR and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina and Brambles 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 Brambles Ltd ADR are associated (or correlated) with Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of Brambles i.e., Brambles and Wilhelmina go up and down completely randomly.
Pair Corralation between Brambles and Wilhelmina
Assuming the 90 days horizon Brambles is expected to generate 11.19 times less return on investment than Wilhelmina. But when comparing it to its historical volatility, Brambles Ltd ADR is 2.02 times less risky than Wilhelmina. It trades about 0.05 of its potential returns per unit of risk. Wilhelmina is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 332.00 in Wilhelmina on August 28, 2024 and sell it today you would earn a total of 63.00 from holding Wilhelmina or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brambles Ltd ADR vs. Wilhelmina
Performance |
| Timeline |
| Brambles ADR |
| Wilhelmina |
Brambles and Wilhelmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brambles and Wilhelmina
The main advantage of trading using opposite Brambles and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brambles position performs unexpectedly, Wilhelmina 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 Wilhelmina will offset losses from the drop in Wilhelmina's long position.| Brambles vs. Cintas | Brambles vs. Thomson Reuters Corp | Brambles vs. Global Payments | Brambles vs. RB Global |
| Wilhelmina vs. Performant Financial | Wilhelmina vs. Network 1 Technologies | Wilhelmina vs. Rentokil Initial PLC | Wilhelmina vs. Mader Group Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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