Correlation Between BKI Investment and Wam Capital

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

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

Diversification Opportunities for BKI Investment and Wam Capital

0.22

Correlation Coefficient

BKI Investment  Wam Capital

Modest diversification

The 3 months correlation between BKI and Wam is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and BKI Investment 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 BKI Investment are associated (or correlated) with Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of BKI Investment i.e., BKI Investment and Wam Capital go up and down completely randomly.

Pair Corralation between BKI Investment and Wam Capital

Assuming the 90 days trading horizon BKI Investment is expected to under-perform the Wam Capital. In addition to that, BKI Investment is 1.05 times more volatile than Wam Capital. It trades about -0.01 of its total potential returns per unit of risk. Wam Capital is currently generating about 0.08 per unit of volatility. If you would invest  157.00  in Wam Capital on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Wam Capital or generate 3.82% return on investment over 90 days.

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

BKI Investment  vs.  Wam Capital

BKI Investment

Risk-Adjusted Performance

Very Weak

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

Wam Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Wam Capital 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 BKI Investment and Wam Capital

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

The idea behind BKI Investment and Wam Capital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.