Correlation Between Event Hospitality and Wam Capital

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

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

Diversification Opportunities for Event Hospitality and Wam Capital

0.65

Correlation Coefficient

Event Hospitality  Wam Capital

Poor diversification

The 3 months correlation between Event and Wam is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Event Hospitality and and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and Event Hospitality 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 Event Hospitality and 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 Event Hospitality i.e., Event Hospitality and Wam Capital go up and down completely randomly.

Pair Corralation between Event Hospitality and Wam Capital

Assuming the 90 days trading horizon Event Hospitality and is expected to generate 2.64 times more return on investment than Wam Capital. However, Event Hospitality is 2.64 times more volatile than Wam Capital. It trades about 0.19 of its potential returns per unit of risk. Wam Capital is currently generating about 0.12 per unit of risk. If you would invest  1,104  in Event Hospitality and on December 20, 2024 and sell it today you would earn a total of  279.00  from holding Event Hospitality and or generate 25.27% return on investment over 90 days.

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

Event Hospitality and  vs.  Wam Capital

Event Hospitality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wam Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Capital are ranked lower than 9 (%) 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 Event Hospitality and Wam Capital

The main advantage of trading using opposite Event Hospitality and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Event Hospitality 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 Event Hospitality and 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.