Correlation Between Centuria Industrial and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Centuria Industrial and WiseTech Global 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 Centuria Industrial and WiseTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centuria Industrial Reit and WiseTech Global Limited, you can compare the effects of market volatilities on Centuria Industrial and WiseTech Global 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 Centuria Industrial with a short position of WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centuria Industrial and WiseTech Global.
Diversification Opportunities for Centuria Industrial and WiseTech Global
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Centuria and WiseTech is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Centuria Industrial 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 Centuria Industrial Reit are associated (or correlated) with WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Centuria Industrial i.e., Centuria Industrial and WiseTech Global go up and down completely randomly.
Pair Corralation between Centuria Industrial and WiseTech Global
Assuming the 90 days trading horizon Centuria Industrial Reit is expected to under-perform the WiseTech Global. But the stock apears to be less risky and, when comparing its historical volatility, Centuria Industrial Reit is 5.13 times less risky than WiseTech Global. The stock trades about -0.26 of its potential returns per unit of risk. The WiseTech Global Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 13,515 in WiseTech Global Limited on August 28, 2024 and sell it today you would lose (1,075) from holding WiseTech Global Limited or give up 7.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centuria Industrial Reit vs. WiseTech Global Limited
Performance |
| Timeline |
| Centuria Industrial Reit |
| WiseTech Global |
Centuria Industrial and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centuria Industrial and WiseTech Global
The main advantage of trading using opposite Centuria Industrial and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centuria Industrial position performs unexpectedly, WiseTech Global 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 WiseTech Global will offset losses from the drop in WiseTech Global's long position.| Centuria Industrial vs. Scentre Group | Centuria Industrial vs. Vicinity Centres Re | Centuria Industrial vs. Charter Hall Retail | Centuria Industrial vs. Cromwell Property Group |
| WiseTech Global vs. Energy Resources | WiseTech Global vs. 88 Energy | WiseTech Global vs. Amani Gold | WiseTech Global vs. A1 Investments Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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