Correlation Between Carlton Investments and Wam Leaders
Can any of the company-specific risk be diversified away by investing in both Carlton Investments 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 Carlton Investments and Wam Leaders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlton Investments and Wam Leaders, you can compare the effects of market volatilities on Carlton Investments 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 Carlton Investments with a short position of Wam Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and Wam Leaders.
Diversification Opportunities for Carlton Investments and Wam Leaders
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carlton and Wam is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders and Carlton Investments 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 Carlton Investments 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 Carlton Investments i.e., Carlton Investments and Wam Leaders go up and down completely randomly.
Pair Corralation between Carlton Investments and Wam Leaders
Assuming the 90 days trading horizon Carlton Investments is expected to generate 0.93 times more return on investment than Wam Leaders. However, Carlton Investments is 1.07 times less risky than Wam Leaders. It trades about 0.02 of its potential returns per unit of risk. Wam Leaders is currently generating about 0.0 per unit of risk. If you would invest 2,908 in Carlton Investments on September 3, 2024 and sell it today you would earn a total of 162.00 from holding Carlton Investments or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlton Investments vs. Wam Leaders
Performance |
| Timeline |
| Carlton Investments |
| Wam Leaders |
Carlton Investments and Wam Leaders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlton Investments and Wam Leaders
The main advantage of trading using opposite Carlton Investments and Wam Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlton Investments 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.The idea behind Carlton Investments and Wam Leaders pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wam Leaders vs. oOhMedia | Wam Leaders vs. Navigator Global Investments | Wam Leaders vs. BKI Investment | Wam Leaders vs. Carlton Investments |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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