Correlation Between WA1 Resources and Wildcat Resources
Can any of the company-specific risk be diversified away by investing in both WA1 Resources and Wildcat 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 WA1 Resources and Wildcat Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WA1 Resources and Wildcat Resources, you can compare the effects of market volatilities on WA1 Resources and Wildcat 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 WA1 Resources with a short position of Wildcat Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA1 Resources and Wildcat Resources.
Diversification Opportunities for WA1 Resources and Wildcat Resources
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WA1 and Wildcat is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding WA1 Resources and Wildcat Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildcat Resources 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 Wildcat Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildcat Resources has no effect on the direction of WA1 Resources i.e., WA1 Resources and Wildcat Resources go up and down completely randomly.
Pair Corralation between WA1 Resources and Wildcat Resources
Assuming the 90 days trading horizon WA1 Resources is expected to generate 0.82 times more return on investment than Wildcat Resources. However, WA1 Resources is 1.23 times less risky than Wildcat Resources. It trades about 0.01 of its potential returns per unit of risk. Wildcat Resources is currently generating about -0.03 per unit of risk. If you would invest 1,540 in WA1 Resources on October 12, 2024 and sell it today you would lose (196.00) from holding WA1 Resources or give up 12.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WA1 Resources vs. Wildcat Resources
Performance |
| Timeline |
| WA1 Resources |
| Wildcat Resources |
WA1 Resources and Wildcat Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WA1 Resources and Wildcat Resources
The main advantage of trading using opposite WA1 Resources and Wildcat Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA1 Resources position performs unexpectedly, Wildcat 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 Wildcat Resources will offset losses from the drop in Wildcat Resources' long position.| WA1 Resources vs. Magellan Financial Group | WA1 Resources vs. Qbe Insurance Group | WA1 Resources vs. Medibank Private | WA1 Resources vs. Collins Foods |
| Wildcat Resources vs. Aeon Metals | Wildcat Resources vs. Centrex Metals | Wildcat Resources vs. Centuria Industrial Reit | Wildcat Resources vs. Aussie Broadband |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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