Correlation Between WiseTech Global and Pro Medicus
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Pro Medicus 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 Pro Medicus 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 Pro Medicus, you can compare the effects of market volatilities on WiseTech Global and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Pro Medicus.
Diversification Opportunities for WiseTech Global and Pro Medicus
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WiseTech and Pro is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of WiseTech Global i.e., WiseTech Global and Pro Medicus go up and down completely randomly.
Pair Corralation between WiseTech Global and Pro Medicus
Assuming the 90 days trading horizon WiseTech Global is expected to generate 5.37 times less return on investment than Pro Medicus. In addition to that, WiseTech Global is 1.95 times more volatile than Pro Medicus. It trades about 0.04 of its total potential returns per unit of risk. Pro Medicus is currently generating about 0.41 per unit of volatility. If you would invest 14,693 in Pro Medicus on August 29, 2024 and sell it today you would earn a total of 8,307 from holding Pro Medicus or generate 56.54% 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. Pro Medicus
Performance |
| Timeline |
| WiseTech Global |
| Pro Medicus |
WiseTech Global and Pro Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Pro Medicus
The main advantage of trading using opposite WiseTech Global and Pro Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Pro Medicus 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 Pro Medicus will offset losses from the drop in Pro Medicus' long position.| WiseTech Global vs. PVW Resources | WiseTech Global vs. Woolworths | WiseTech Global vs. Wesfarmers | WiseTech Global vs. Coles Group |
| Pro Medicus vs. Westpac Banking | Pro Medicus vs. Champion Iron | Pro Medicus vs. Ridley | Pro Medicus vs. Peel Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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