Correlation Between Wam Capital and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Wam Capital and Australian Strategic 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 Wam Capital and Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Capital and Australian Strategic Materials, you can compare the effects of market volatilities on Wam Capital and Australian Strategic 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 Wam Capital with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Capital and Australian Strategic.
Diversification Opportunities for Wam Capital and Australian Strategic
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wam and Australian is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Wam Capital 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 Wam Capital are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Wam Capital i.e., Wam Capital and Australian Strategic go up and down completely randomly.
Pair Corralation between Wam Capital and Australian Strategic
Assuming the 90 days trading horizon Wam Capital is expected to generate 0.19 times more return on investment than Australian Strategic. However, Wam Capital is 5.38 times less risky than Australian Strategic. It trades about 0.05 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.08 per unit of risk. If you would invest 152.00 in Wam Capital on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Wam Capital or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wam Capital vs. Australian Strategic Materials
Performance |
| Timeline |
| Wam Capital |
| Australian Strategic |
Wam Capital and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Capital and Australian Strategic
The main advantage of trading using opposite Wam Capital and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Capital position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| Wam Capital vs. Australian Strategic Materials | Wam Capital vs. Stelar Metals | Wam Capital vs. Collins Foods | Wam Capital vs. Beston Global Food |
| Australian Strategic vs. Northern Star Resources | Australian Strategic vs. Evolution Mining | Australian Strategic vs. Bluescope Steel | Australian Strategic vs. Sandfire Resources NL |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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