Correlation Between Global Health and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Global Health 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 Global Health and WiseTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and WiseTech Global Limited, you can compare the effects of market volatilities on Global Health 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 Global Health with a short position of WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and WiseTech Global.
Diversification Opportunities for Global Health and WiseTech Global
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and WiseTech is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Global Health 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 Global Health 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 Global Health i.e., Global Health and WiseTech Global go up and down completely randomly.
Pair Corralation between Global Health and WiseTech Global
Assuming the 90 days trading horizon Global Health is expected to generate 2.44 times more return on investment than WiseTech Global. However, Global Health is 2.44 times more volatile than WiseTech Global Limited. It trades about 0.02 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about -0.01 per unit of risk. If you would invest 14.00 in Global Health on November 4, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global Health vs. WiseTech Global Limited
Performance |
| Timeline |
| Global Health |
| WiseTech Global |
Global Health and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and WiseTech Global
The main advantage of trading using opposite Global Health and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health 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.| Global Health vs. Homeco Daily Needs | Global Health vs. Phoslock Environmental Technologies | Global Health vs. Champion Iron | Global Health vs. Aeris Environmental |
| WiseTech Global vs. Hotel Property Investments | WiseTech Global vs. ACDC Metals | WiseTech Global vs. Norfolk Metals | WiseTech Global vs. K2 Asset Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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