Correlation Between Wesfarmers and Oakridge International
Can any of the company-specific risk be diversified away by investing in both Wesfarmers and Oakridge International 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 Wesfarmers and Oakridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesfarmers and Oakridge International, you can compare the effects of market volatilities on Wesfarmers and Oakridge International 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 Wesfarmers with a short position of Oakridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesfarmers and Oakridge International.
Diversification Opportunities for Wesfarmers and Oakridge International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wesfarmers and Oakridge is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wesfarmers and Oakridge International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakridge International and Wesfarmers 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 Wesfarmers are associated (or correlated) with Oakridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakridge International has no effect on the direction of Wesfarmers i.e., Wesfarmers and Oakridge International go up and down completely randomly.
Pair Corralation between Wesfarmers and Oakridge International
Assuming the 90 days trading horizon Wesfarmers is expected to generate 0.23 times more return on investment than Oakridge International. However, Wesfarmers is 4.26 times less risky than Oakridge International. It trades about 0.11 of its potential returns per unit of risk. Oakridge International is currently generating about 0.0 per unit of risk. If you would invest 4,317 in Wesfarmers on September 14, 2024 and sell it today you would earn a total of 3,143 from holding Wesfarmers or generate 72.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Wesfarmers vs. Oakridge International
Performance |
| Timeline |
| Wesfarmers |
| Oakridge International |
Wesfarmers and Oakridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesfarmers and Oakridge International
The main advantage of trading using opposite Wesfarmers and Oakridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesfarmers position performs unexpectedly, Oakridge International 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 Oakridge International will offset losses from the drop in Oakridge International's long position.| Wesfarmers vs. ACDC Metals | Wesfarmers vs. Bisalloy Steel Group | Wesfarmers vs. Aurelia Metals | Wesfarmers vs. Dalaroo Metals |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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