Correlation Between Extended Market and Wpg Partners
Can any of the company-specific risk be diversified away by investing in both Extended Market and Wpg Partners 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 Extended Market and Wpg Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Wpg Partners Smallmicro, you can compare the effects of market volatilities on Extended Market and Wpg Partners 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 Extended Market with a short position of Wpg Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Wpg Partners.
Diversification Opportunities for Extended Market and Wpg Partners
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Extended and Wpg is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Wpg Partners Smallmicro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wpg Partners Smallmicro and Extended Market 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 Extended Market Index are associated (or correlated) with Wpg Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wpg Partners Smallmicro has no effect on the direction of Extended Market i.e., Extended Market and Wpg Partners go up and down completely randomly.
Pair Corralation between Extended Market and Wpg Partners
Assuming the 90 days horizon Extended Market Index is expected to generate 1.15 times more return on investment than Wpg Partners. However, Extended Market is 1.15 times more volatile than Wpg Partners Smallmicro. It trades about 0.08 of its potential returns per unit of risk. Wpg Partners Smallmicro is currently generating about 0.08 per unit of risk. If you would invest 2,113 in Extended Market Index on August 25, 2024 and sell it today you would earn a total of 377.00 from holding Extended Market Index or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Wpg Partners Smallmicro
Performance |
| Timeline |
| Extended Market Index |
| Wpg Partners Smallmicro |
Extended Market and Wpg Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Wpg Partners
The main advantage of trading using opposite Extended Market and Wpg Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Wpg Partners 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 Wpg Partners will offset losses from the drop in Wpg Partners' long position.| Extended Market vs. T Rowe Price | Extended Market vs. Touchstone Large Cap | Extended Market vs. Legg Mason Bw | Extended Market vs. Aqr Large Cap |
| Wpg Partners vs. Artisan Emerging Markets | Wpg Partners vs. Rbc Emerging Markets | Wpg Partners vs. Extended Market Index | Wpg Partners vs. Pace International Emerging |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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