Correlation Between Wam Capital and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Wam Capital and Carlton Investments 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 Carlton Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Capital and Carlton Investments, you can compare the effects of market volatilities on Wam Capital and Carlton Investments 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 Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Capital and Carlton Investments.
Diversification Opportunities for Wam Capital and Carlton Investments
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wam and Carlton is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Wam Capital i.e., Wam Capital and Carlton Investments go up and down completely randomly.
Pair Corralation between Wam Capital and Carlton Investments
Assuming the 90 days trading horizon Wam Capital is expected to generate 1.14 times less return on investment than Carlton Investments. In addition to that, Wam Capital is 1.11 times more volatile than Carlton Investments. It trades about 0.03 of its total potential returns per unit of risk. Carlton Investments is currently generating about 0.04 per unit of volatility. If you would invest 2,769 in Carlton Investments on September 12, 2024 and sell it today you would earn a total of 306.00 from holding Carlton Investments or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wam Capital vs. Carlton Investments
Performance |
| Timeline |
| Wam Capital |
| Carlton Investments |
Wam Capital and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Capital and Carlton Investments
The main advantage of trading using opposite Wam Capital and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Capital position performs unexpectedly, Carlton Investments 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 Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Wam Capital vs. Garda Diversified Ppty | Wam Capital vs. Sandon Capital Investments | Wam Capital vs. Mirrabooka Investments | Wam Capital vs. REGAL ASIAN INVESTMENTS |
| Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. MFF Capital Investments | Carlton Investments vs. Wam Capital | Carlton Investments vs. Wam Leaders |
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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