Correlation Between WOLFDEN RES and Carsales
Can any of the company-specific risk be diversified away by investing in both WOLFDEN RES and Carsales 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 WOLFDEN RES and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WOLFDEN RES P and CarsalesCom, you can compare the effects of market volatilities on WOLFDEN RES and Carsales 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 WOLFDEN RES with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOLFDEN RES and Carsales.
Diversification Opportunities for WOLFDEN RES and Carsales
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WOLFDEN and Carsales is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding WOLFDEN RES P and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and WOLFDEN RES 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 WOLFDEN RES P are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of WOLFDEN RES i.e., WOLFDEN RES and Carsales go up and down completely randomly.
Pair Corralation between WOLFDEN RES and Carsales
Assuming the 90 days horizon WOLFDEN RES P is expected to generate 24.87 times more return on investment than Carsales. However, WOLFDEN RES is 24.87 times more volatile than CarsalesCom. It trades about 0.13 of its potential returns per unit of risk. CarsalesCom is currently generating about -0.1 per unit of risk. If you would invest 2.70 in WOLFDEN RES P on October 12, 2024 and sell it today you would earn a total of 0.05 from holding WOLFDEN RES P or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
WOLFDEN RES P vs. CarsalesCom
Performance |
| Timeline |
| WOLFDEN RES P |
| CarsalesCom |
WOLFDEN RES and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WOLFDEN RES and Carsales
The main advantage of trading using opposite WOLFDEN RES and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOLFDEN RES position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| WOLFDEN RES vs. New Residential Investment | WOLFDEN RES vs. Salesforce | WOLFDEN RES vs. MUTUIONLINE | WOLFDEN RES vs. SLR Investment Corp |
| Carsales vs. GALENA MINING LTD | Carsales vs. MCEWEN MINING INC | Carsales vs. MAG SILVER | Carsales vs. Japan Tobacco |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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