Correlation Between WA1 Resources and EP Financial
Can any of the company-specific risk be diversified away by investing in both WA1 Resources and EP Financial 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 WA1 Resources and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WA1 Resources and EP Financial Group, you can compare the effects of market volatilities on WA1 Resources and EP Financial 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 WA1 Resources with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA1 Resources and EP Financial.
Diversification Opportunities for WA1 Resources and EP Financial
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between WA1 and EP1 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding WA1 Resources and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and WA1 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 WA1 Resources are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of WA1 Resources i.e., WA1 Resources and EP Financial go up and down completely randomly.
Pair Corralation between WA1 Resources and EP Financial
Assuming the 90 days trading horizon WA1 Resources is expected to generate 1.17 times more return on investment than EP Financial. However, WA1 Resources is 1.17 times more volatile than EP Financial Group. It trades about 0.25 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.08 per unit of risk. If you would invest 1,375 in WA1 Resources on September 2, 2024 and sell it today you would earn a total of 228.00 from holding WA1 Resources or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WA1 Resources vs. EP Financial Group
Performance |
| Timeline |
| WA1 Resources |
| EP Financial Group |
WA1 Resources and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WA1 Resources and EP Financial
The main advantage of trading using opposite WA1 Resources and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA1 Resources position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| WA1 Resources vs. Collins Foods | WA1 Resources vs. Hotel Property Investments | WA1 Resources vs. Olivers Real Food | WA1 Resources vs. Dicker Data |
| EP Financial vs. WA1 Resources | EP Financial vs. Predictive Discovery | EP Financial vs. Cooper Metals | EP Financial vs. OD6 Metals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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