Correlation Between Wam Leaders and CAR GROUP
Can any of the company-specific risk be diversified away by investing in both Wam Leaders and CAR GROUP 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 Leaders and CAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Leaders and CAR GROUP LIMITED, you can compare the effects of market volatilities on Wam Leaders and CAR GROUP 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 Leaders with a short position of CAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Leaders and CAR GROUP.
Diversification Opportunities for Wam Leaders and CAR GROUP
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wam and CAR is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wam Leaders and CAR GROUP LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAR GROUP LIMITED and Wam Leaders 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 Leaders are associated (or correlated) with CAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAR GROUP LIMITED has no effect on the direction of Wam Leaders i.e., Wam Leaders and CAR GROUP go up and down completely randomly.
Pair Corralation between Wam Leaders and CAR GROUP
Assuming the 90 days trading horizon Wam Leaders is expected to under-perform the CAR GROUP. But the stock apears to be less risky and, when comparing its historical volatility, Wam Leaders is 1.45 times less risky than CAR GROUP. The stock trades about 0.0 of its potential returns per unit of risk. The CAR GROUP LIMITED is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,052 in CAR GROUP LIMITED on September 3, 2024 and sell it today you would earn a total of 2,098 from holding CAR GROUP LIMITED or generate 102.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wam Leaders vs. CAR GROUP LIMITED
Performance |
| Timeline |
| Wam Leaders |
| CAR GROUP LIMITED |
Wam Leaders and CAR GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Leaders and CAR GROUP
The main advantage of trading using opposite Wam Leaders and CAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Leaders position performs unexpectedly, CAR GROUP 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 CAR GROUP will offset losses from the drop in CAR GROUP's long position.| Wam Leaders vs. oOhMedia | Wam Leaders vs. Navigator Global Investments | Wam Leaders vs. BKI Investment | Wam Leaders vs. Carlton Investments |
| CAR GROUP vs. The Environmental Group | CAR GROUP vs. Macquarie Technology Group | CAR GROUP vs. TTG Fintech | CAR GROUP vs. Spirit Telecom |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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