Correlation Between Wam Capital and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Wam Capital and Qantas Airways 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 Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Capital and Qantas Airways, you can compare the effects of market volatilities on Wam Capital and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Capital and Qantas Airways.
Diversification Opportunities for Wam Capital and Qantas Airways
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wam and Qantas is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Wam Capital i.e., Wam Capital and Qantas Airways go up and down completely randomly.
Pair Corralation between Wam Capital and Qantas Airways
Assuming the 90 days trading horizon Wam Capital is expected to generate 2.42 times less return on investment than Qantas Airways. But when comparing it to its historical volatility, Wam Capital is 2.77 times less risky than Qantas Airways. It trades about 0.06 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 929.00 in Qantas Airways on November 8, 2024 and sell it today you would earn a total of 13.00 from holding Qantas Airways or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wam Capital vs. Qantas Airways
Performance |
| Timeline |
| Wam Capital |
| Qantas Airways |
Wam Capital and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Capital and Qantas Airways
The main advantage of trading using opposite Wam Capital and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Capital position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Wam Capital vs. Oneview Healthcare PLC | Wam Capital vs. Apiam Animal Health | Wam Capital vs. Tombador Iron | Wam Capital vs. Bisalloy Steel Group |
| Qantas Airways vs. Qbe Insurance Group | Qantas Airways vs. Aurelia Metals | Qantas Airways vs. Auswide Bank | Qantas Airways vs. Sequoia Financial Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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