Correlation Between WiseTech Global and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Insignia Financial 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 Insignia Financial 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 Insignia Financial, you can compare the effects of market volatilities on WiseTech Global and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Insignia Financial.
Diversification Opportunities for WiseTech Global and Insignia Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between WiseTech and Insignia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of WiseTech Global i.e., WiseTech Global and Insignia Financial go up and down completely randomly.
Pair Corralation between WiseTech Global and Insignia Financial
Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 1.09 times more return on investment than Insignia Financial. However, WiseTech Global is 1.09 times more volatile than Insignia Financial. It trades about 0.08 of its potential returns per unit of risk. Insignia Financial is currently generating about 0.01 per unit of risk. If you would invest 5,265 in WiseTech Global Limited on August 29, 2024 and sell it today you would earn a total of 7,175 from holding WiseTech Global Limited or generate 136.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Insignia Financial
Performance |
| Timeline |
| WiseTech Global |
| Insignia Financial |
WiseTech Global and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Insignia Financial
The main advantage of trading using opposite WiseTech Global and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| WiseTech Global vs. Energy Resources | WiseTech Global vs. 88 Energy | WiseTech Global vs. Amani Gold | WiseTech Global vs. A1 Investments Resources |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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