Correlation Between Evolution Mining and Wam Capital

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

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

Diversification Opportunities for Evolution Mining and Wam Capital

-0.36

Correlation Coefficient

Evolution Mining  Wam Capital

Very good diversification

The 3 months correlation between Evolution and Wam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and Evolution Mining 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 Evolution Mining 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 Evolution Mining i.e., Evolution Mining and Wam Capital go up and down completely randomly.

Pair Corralation between Evolution Mining and Wam Capital

Assuming the 90 days trading horizon Evolution Mining is expected to generate 2.98 times more return on investment than Wam Capital. However, Evolution Mining is 2.98 times more volatile than Wam Capital. It trades about 0.05 of its potential returns per unit of risk. Wam Capital is currently generating about 0.06 per unit of risk. If you would invest  381.00  in Evolution Mining on October 9, 2024 and sell it today you would earn a total of  111.00  from holding Evolution Mining or generate 29.13% return on investment over 90 days.

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

Evolution Mining  vs.  Wam Capital

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wam Capital

Risk-Adjusted Performance

6 of 100

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 Evolution Mining and Wam Capital

The main advantage of trading using opposite Evolution Mining and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining 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 Evolution Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.