Correlation Between We Buy and Rex Trueform
Can any of the company-specific risk be diversified away by investing in both We Buy and Rex Trueform 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 We Buy and Rex Trueform into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between We Buy Cars and Rex Trueform Group, you can compare the effects of market volatilities on We Buy and Rex Trueform 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 We Buy with a short position of Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of We Buy and Rex Trueform.
Diversification Opportunities for We Buy and Rex Trueform
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WBC and Rex is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding We Buy Cars and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group and We Buy 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 We Buy Cars are associated (or correlated) with Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of We Buy i.e., We Buy and Rex Trueform go up and down completely randomly.
Pair Corralation between We Buy and Rex Trueform
Assuming the 90 days trading horizon We Buy Cars is expected to generate 6.2 times more return on investment than Rex Trueform. However, We Buy is 6.2 times more volatile than Rex Trueform Group. It trades about 0.63 of its potential returns per unit of risk. Rex Trueform Group is currently generating about -0.24 per unit of risk. If you would invest 351,900 in We Buy Cars on August 28, 2024 and sell it today you would earn a total of 86,300 from holding We Buy Cars or generate 24.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
We Buy Cars vs. Rex Trueform Group
Performance |
| Timeline |
| We Buy Cars |
| Rex Trueform Group |
We Buy and Rex Trueform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with We Buy and Rex Trueform
The main advantage of trading using opposite We Buy and Rex Trueform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if We Buy position performs unexpectedly, Rex Trueform 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 Rex Trueform will offset losses from the drop in Rex Trueform's long position.| We Buy vs. eMedia Holdings Limited | We Buy vs. Deneb Investments | We Buy vs. Hosken Consolidated Investments | We Buy vs. Astoria Investments |
| Rex Trueform vs. Mr Price Group | Rex Trueform vs. Truworths International | Rex Trueform vs. Rex Trueform 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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