Correlation Between Wam Leaders and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both Wam Leaders and Flagship 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 Flagship 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 Flagship Investments, you can compare the effects of market volatilities on Wam Leaders and Flagship 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Leaders and Flagship Investments.
Diversification Opportunities for Wam Leaders and Flagship Investments
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wam and Flagship is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wam Leaders and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Wam Leaders i.e., Wam Leaders and Flagship Investments go up and down completely randomly.
Pair Corralation between Wam Leaders and Flagship Investments
Assuming the 90 days trading horizon Wam Leaders is expected to generate 15.75 times less return on investment than Flagship Investments. But when comparing it to its historical volatility, Wam Leaders is 1.58 times less risky than Flagship Investments. It trades about 0.01 of its potential returns per unit of risk. Flagship Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Flagship Investments on September 2, 2024 and sell it today you would earn a total of 49.00 from holding Flagship Investments or generate 29.52% 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. Flagship Investments
Performance |
| Timeline |
| Wam Leaders |
| Flagship Investments |
Wam Leaders and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Leaders and Flagship Investments
The main advantage of trading using opposite Wam Leaders and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Leaders position performs unexpectedly, Flagship 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| Wam Leaders vs. Ramsay Health Care | Wam Leaders vs. My Foodie Box | Wam Leaders vs. WiseTech Global Limited | Wam Leaders vs. Health and Plant |
| Flagship Investments vs. Lendlease Group | Flagship Investments vs. Hutchison Telecommunications | Flagship Investments vs. BSP Financial Group | Flagship Investments vs. National Australia Bank |
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 Stocks Directory module to find actively traded stocks across global markets.
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