Correlation Between ACDC Metals and Wt Financial

Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Wt 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 ACDC Metals and Wt Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACDC Metals and Wt Financial Group, you can compare the effects of market volatilities on ACDC Metals and Wt 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 ACDC Metals with a short position of Wt Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Wt Financial.

Diversification Opportunities for ACDC Metals and Wt Financial

0.49

Correlation Coefficient

ACDC Metals  Wt Financial

Very weak diversification

The 3 months correlation between ACDC and WTL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Wt Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wt Financial Group and ACDC Metals 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 ACDC Metals are associated (or correlated) with Wt Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wt Financial Group has no effect on the direction of ACDC Metals i.e., ACDC Metals and Wt Financial go up and down completely randomly.

Pair Corralation between ACDC Metals and Wt Financial

Assuming the 90 days trading horizon ACDC Metals is expected to generate 1.52 times less return on investment than Wt Financial. In addition to that, ACDC Metals is 1.81 times more volatile than Wt Financial Group. It trades about 0.11 of its total potential returns per unit of risk. Wt Financial Group is currently generating about 0.31 per unit of volatility. If you would invest  8.20  in Wt Financial Group on October 8, 2024 and sell it today you would earn a total of  1.20  from holding Wt Financial Group or generate 14.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ACDC Metals  vs.  Wt Financial Group

ACDC Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ACDC Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, ACDC Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wt Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wt Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Wt Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ACDC Metals and Wt Financial

The main advantage of trading using opposite ACDC Metals and Wt Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Wt 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 Wt Financial will offset losses from the drop in Wt Financial's long position.

The idea behind ACDC Metals and Wt Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.