Correlation Between OAR Resources and Wam Capital
Can any of the company-specific risk be diversified away by investing in both OAR Resources and Wam Capital 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 OAR Resources and Wam Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OAR Resources and Wam Capital, you can compare the effects of market volatilities on OAR Resources and Wam Capital 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 OAR Resources with a short position of Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OAR Resources and Wam Capital.
Diversification Opportunities for OAR Resources and Wam Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OAR and Wam is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding OAR Resources and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and OAR Resources 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 OAR Resources are associated (or correlated) with Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of OAR Resources i.e., OAR Resources and Wam Capital go up and down completely randomly.
Pair Corralation between OAR Resources and Wam Capital
Assuming the 90 days trading horizon OAR Resources is expected to under-perform the Wam Capital. In addition to that, OAR Resources is 7.39 times more volatile than Wam Capital. It trades about -0.43 of its total potential returns per unit of risk. Wam Capital is currently generating about 0.23 per unit of volatility. If you would invest 154.00 in Wam Capital on October 21, 2024 and sell it today you would earn a total of 5.00 from holding Wam Capital or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OAR Resources vs. Wam Capital
Performance |
| Timeline |
| OAR Resources |
| Wam Capital |
OAR Resources and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OAR Resources and Wam Capital
The main advantage of trading using opposite OAR Resources and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OAR Resources position performs unexpectedly, Wam Capital 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 Wam Capital will offset losses from the drop in Wam Capital's long position.| OAR Resources vs. Carawine Resources Limited | OAR Resources vs. Zoom2u Technologies | OAR Resources vs. Ambertech | OAR Resources vs. Treasury Wine Estates |
| Wam Capital vs. Prodigy Gold NL | Wam Capital vs. Pointsbet Holdings | Wam Capital vs. Cardno | Wam Capital vs. Indiana Resources |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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