Correlation Between Garda Diversified and Wesfarmers
Can any of the company-specific risk be diversified away by investing in both Garda Diversified and Wesfarmers 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 Garda Diversified and Wesfarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garda Diversified Ppty and Wesfarmers, you can compare the effects of market volatilities on Garda Diversified and Wesfarmers 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 Garda Diversified with a short position of Wesfarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garda Diversified and Wesfarmers.
Diversification Opportunities for Garda Diversified and Wesfarmers
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Garda and Wesfarmers is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Garda Diversified Ppty and Wesfarmers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers and Garda Diversified 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 Garda Diversified Ppty are associated (or correlated) with Wesfarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesfarmers has no effect on the direction of Garda Diversified i.e., Garda Diversified and Wesfarmers go up and down completely randomly.
Pair Corralation between Garda Diversified and Wesfarmers
Assuming the 90 days trading horizon Garda Diversified is expected to generate 44.74 times less return on investment than Wesfarmers. In addition to that, Garda Diversified is 1.29 times more volatile than Wesfarmers. It trades about 0.0 of its total potential returns per unit of risk. Wesfarmers is currently generating about 0.09 per unit of volatility. If you would invest 4,756 in Wesfarmers on November 27, 2024 and sell it today you would earn a total of 2,932 from holding Wesfarmers or generate 61.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garda Diversified Ppty vs. Wesfarmers
Performance |
| Timeline |
| Garda Diversified Ppty |
| Wesfarmers |
Garda Diversified and Wesfarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garda Diversified and Wesfarmers
The main advantage of trading using opposite Garda Diversified and Wesfarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garda Diversified position performs unexpectedly, Wesfarmers 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 Wesfarmers will offset losses from the drop in Wesfarmers' long position.| Garda Diversified vs. High Tech Metals | Garda Diversified vs. Macquarie Technology Group | Garda Diversified vs. Fisher Paykel Healthcare | Garda Diversified vs. Thorney Technologies |
| Wesfarmers vs. Diversified United Investment | Wesfarmers vs. Mayfield Childcare | Wesfarmers vs. Sports Entertainment Group | Wesfarmers vs. BKI Investment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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