Correlation Between Wam Leaders and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Wam Leaders 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 Leaders 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 Leaders and Carlton Investments, you can compare the effects of market volatilities on Wam Leaders 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 Leaders with a short position of Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Leaders and Carlton Investments.
Diversification Opportunities for Wam Leaders and Carlton Investments
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wam and Carlton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wam Leaders and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 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 Leaders i.e., Wam Leaders and Carlton Investments go up and down completely randomly.
Pair Corralation between Wam Leaders and Carlton Investments
Assuming the 90 days trading horizon Wam Leaders is expected to generate 0.79 times more return on investment than Carlton Investments. However, Wam Leaders is 1.27 times less risky than Carlton Investments. It trades about 0.34 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.26 per unit of risk. If you would invest 124.00 in Wam Leaders on November 28, 2024 and sell it today you would earn a total of 8.00 from holding Wam Leaders or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wam Leaders vs. Carlton Investments
Performance |
| Timeline |
| Wam Leaders |
| Carlton Investments |
Wam Leaders and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Leaders and Carlton Investments
The main advantage of trading using opposite Wam Leaders and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Leaders 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 Leaders vs. Zeotech | Wam Leaders vs. Queste Communications | Wam Leaders vs. Hansen Technologies | Wam Leaders vs. Spirit Telecom |
| Carlton Investments vs. Group 6 Metals | Carlton Investments vs. Autosports Group | Carlton Investments vs. Falcon Metals | Carlton Investments vs. Aeon Metals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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