Correlation Between Dicker Data and Wam Leaders
Can any of the company-specific risk be diversified away by investing in both Dicker Data 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 Dicker Data and Wam Leaders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicker Data and Wam Leaders, you can compare the effects of market volatilities on Dicker Data 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 Dicker Data with a short position of Wam Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicker Data and Wam Leaders.
Diversification Opportunities for Dicker Data and Wam Leaders
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dicker and Wam is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dicker Data and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders and Dicker Data 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 Dicker Data 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 Dicker Data i.e., Dicker Data and Wam Leaders go up and down completely randomly.
Pair Corralation between Dicker Data and Wam Leaders
Assuming the 90 days trading horizon Dicker Data is expected to generate 1.98 times less return on investment than Wam Leaders. In addition to that, Dicker Data is 1.25 times more volatile than Wam Leaders. It trades about 0.07 of its total potential returns per unit of risk. Wam Leaders is currently generating about 0.18 per unit of volatility. If you would invest 122.00 in Wam Leaders on October 19, 2024 and sell it today you would earn a total of 4.00 from holding Wam Leaders or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicker Data vs. Wam Leaders
Performance |
| Timeline |
| Dicker Data |
| Wam Leaders |
Dicker Data and Wam Leaders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicker Data and Wam Leaders
The main advantage of trading using opposite Dicker Data and Wam Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicker Data 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.| Dicker Data vs. Oceania Healthcare | Dicker Data vs. Energy Technologies Limited | Dicker Data vs. Regis Healthcare | Dicker Data vs. Genetic Technologies |
| Wam Leaders vs. K2 Asset Management | Wam Leaders vs. Kip McGrath Education | Wam Leaders vs. Clime Investment Management | Wam Leaders vs. IDP Education |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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