Correlation Between Live Ventures and Wesfarmers
Can any of the company-specific risk be diversified away by investing in both Live Ventures 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 Live Ventures and Wesfarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Ventures and Wesfarmers Ltd ADR, you can compare the effects of market volatilities on Live Ventures 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 Live Ventures with a short position of Wesfarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Ventures and Wesfarmers.
Diversification Opportunities for Live Ventures and Wesfarmers
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and Wesfarmers is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Wesfarmers Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers ADR and Live Ventures 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 Live Ventures 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 ADR has no effect on the direction of Live Ventures i.e., Live Ventures and Wesfarmers go up and down completely randomly.
Pair Corralation between Live Ventures and Wesfarmers
Given the investment horizon of 90 days Live Ventures is expected to generate 2.81 times less return on investment than Wesfarmers. In addition to that, Live Ventures is 1.08 times more volatile than Wesfarmers Ltd ADR. It trades about 0.04 of its total potential returns per unit of risk. Wesfarmers Ltd ADR is currently generating about 0.12 per unit of volatility. If you would invest 2,238 in Wesfarmers Ltd ADR on November 5, 2024 and sell it today you would earn a total of 117.00 from holding Wesfarmers Ltd ADR or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Ventures vs. Wesfarmers Ltd ADR
Performance |
| Timeline |
| Live Ventures |
| Wesfarmers ADR |
Live Ventures and Wesfarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Ventures and Wesfarmers
The main advantage of trading using opposite Live Ventures and Wesfarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures 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.| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Kingfisher plc | Live Ventures vs. Haverty Furniture Companies |
| Wesfarmers vs. Haverty Furniture Companies | Wesfarmers vs. Arhaus Inc | Wesfarmers vs. Home Depot | Wesfarmers vs. Lowes Companies |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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