Correlation Between Dexus Convenience and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience 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 Dexus Convenience and WiseTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexus Convenience Retail and WiseTech Global Limited, you can compare the effects of market volatilities on Dexus Convenience 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 Dexus Convenience with a short position of WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and WiseTech Global.
Diversification Opportunities for Dexus Convenience and WiseTech Global
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dexus and WiseTech is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Dexus Convenience 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 Dexus Convenience Retail 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 Dexus Convenience i.e., Dexus Convenience and WiseTech Global go up and down completely randomly.
Pair Corralation between Dexus Convenience and WiseTech Global
Assuming the 90 days trading horizon Dexus Convenience is expected to generate 2.18 times less return on investment than WiseTech Global. But when comparing it to its historical volatility, Dexus Convenience Retail is 2.7 times less risky than WiseTech Global. It trades about 0.09 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,660 in WiseTech Global Limited on August 29, 2024 and sell it today you would earn a total of 2,834 from holding WiseTech Global Limited or generate 29.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. WiseTech Global Limited
Performance |
| Timeline |
| Dexus Convenience Retail |
| WiseTech Global |
Dexus Convenience and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and WiseTech Global
The main advantage of trading using opposite Dexus Convenience and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience 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.| Dexus Convenience vs. Australian Unity Office | Dexus Convenience vs. Champion Iron | Dexus Convenience vs. Ridley | Dexus Convenience vs. Peel Mining |
| WiseTech Global vs. PVW Resources | WiseTech Global vs. Woolworths | WiseTech Global vs. Wesfarmers | WiseTech Global vs. Coles Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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