Correlation Between Aflac Incorporated and Wesfarmers

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

By analyzing existing cross correlation between Aflac Incorporated and Wesfarmers Limited, you can compare the effects of market volatilities on Aflac Incorporated and Wesfarmers 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 Aflac Incorporated with a short position of Wesfarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aflac Incorporated and Wesfarmers.

Diversification Opportunities for Aflac Incorporated and Wesfarmers

0.0

Correlation Coefficient

Aflac Incorporated  Wesfarmers

Pay attention - limited upside

The 3 months correlation between Aflac and Wesfarmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and Wesfarmers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers Limited and Aflac Incorporated 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 Aflac Incorporated are associated (or correlated) with Wesfarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesfarmers Limited has no effect on the direction of Aflac Incorporated i.e., Aflac Incorporated and Wesfarmers go up and down completely randomly.

Pair Corralation between Aflac Incorporated and Wesfarmers

If you would invest  10,240  in Aflac Incorporated on December 29, 2024 and sell it today you would earn a total of  740.00  from holding Aflac Incorporated or generate 7.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aflac Incorporated  vs.  Wesfarmers Limited

Aflac Incorporated

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Aflac Incorporated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wesfarmers Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesfarmers Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Wesfarmers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aflac Incorporated and Wesfarmers

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

The idea behind Aflac Incorporated and Wesfarmers Limited 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.