Correlation Between WiseTech Global and Cochlear
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Cochlear 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 WiseTech Global and Cochlear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Cochlear, you can compare the effects of market volatilities on WiseTech Global and Cochlear 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 WiseTech Global with a short position of Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Cochlear.
Diversification Opportunities for WiseTech Global and Cochlear
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between WiseTech and Cochlear is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of WiseTech Global i.e., WiseTech Global and Cochlear go up and down completely randomly.
Pair Corralation between WiseTech Global and Cochlear
Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 1.81 times more return on investment than Cochlear. However, WiseTech Global is 1.81 times more volatile than Cochlear. It trades about 0.1 of its potential returns per unit of risk. Cochlear is currently generating about 0.04 per unit of risk. If you would invest 6,732 in WiseTech Global Limited on August 29, 2024 and sell it today you would earn a total of 5,708 from holding WiseTech Global Limited or generate 84.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Cochlear
Performance |
| Timeline |
| WiseTech Global |
| Cochlear |
WiseTech Global and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Cochlear
The main advantage of trading using opposite WiseTech Global and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| WiseTech Global vs. PVW Resources | WiseTech Global vs. Woolworths | WiseTech Global vs. Wesfarmers | WiseTech Global vs. Coles Group |
| Cochlear vs. Hawsons Iron | Cochlear vs. Beston Global Food | Cochlear vs. Queste Communications | Cochlear vs. Charter Hall Education |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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