Correlation Between Argo Investments and WiseTech Global

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

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

Diversification Opportunities for Argo Investments and WiseTech Global

0.29

Correlation Coefficient

Argo Investments  WiseTech Global

Modest diversification

The 3 months correlation between Argo and WiseTech is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Argo Investments 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 Argo Investments are associated (or correlated) with WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Argo Investments i.e., Argo Investments and WiseTech Global go up and down completely randomly.

Pair Corralation between Argo Investments and WiseTech Global

Assuming the 90 days trading horizon Argo Investments is expected to generate 13.26 times less return on investment than WiseTech Global. But when comparing it to its historical volatility, Argo Investments is 4.35 times less risky than WiseTech Global. It trades about 0.03 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,950  in WiseTech Global Limited on September 26, 2024 and sell it today you would earn a total of  7,451  from holding WiseTech Global Limited or generate 150.53% return on investment over 90 days.

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

Argo Investments  vs.  WiseTech Global Limited

Argo Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Argo Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WiseTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseTech Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, WiseTech Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Argo Investments and WiseTech Global

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

The idea behind Argo Investments and WiseTech Global 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..