Correlation Between WM Technology and Themac Resources
Can any of the company-specific risk be diversified away by investing in both WM Technology and Themac Resources 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 WM Technology and Themac Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and Themac Resources Group, you can compare the effects of market volatilities on WM Technology and Themac Resources 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 WM Technology with a short position of Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Themac Resources.
Diversification Opportunities for WM Technology and Themac Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAPSW and Themac is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and WM Technology 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 WM Technology are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of WM Technology i.e., WM Technology and Themac Resources go up and down completely randomly.
Pair Corralation between WM Technology and Themac Resources
Assuming the 90 days horizon WM Technology is expected to generate 1.31 times more return on investment than Themac Resources. However, WM Technology is 1.31 times more volatile than Themac Resources Group. It trades about 0.06 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.04 per unit of risk. If you would invest 19.00 in WM Technology on September 1, 2024 and sell it today you would lose (14.99) from holding WM Technology or give up 78.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.51% |
| Values | Daily Returns |
WM Technology vs. Themac Resources Group
Performance |
| Timeline |
| WM Technology |
| Themac Resources |
WM Technology and Themac Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and Themac Resources
The main advantage of trading using opposite WM Technology and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, Themac Resources 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 Themac Resources will offset losses from the drop in Themac Resources' long position.The idea behind WM Technology and Themac Resources Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Themac Resources vs. South32 Limited | Themac Resources vs. NioCorp Developments Ltd | Themac Resources vs. HUMANA INC | Themac Resources vs. SCOR PK |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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