Correlation Between Metrics Master and Wam Capital

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

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

Diversification Opportunities for Metrics Master and Wam Capital

0.49

Correlation Coefficient

Metrics Master  Wam Capital

Very weak diversification

The 3 months correlation between Metrics and Wam is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Metrics Master Income and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital and Metrics Master 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 Metrics Master Income 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 Metrics Master i.e., Metrics Master and Wam Capital go up and down completely randomly.

Pair Corralation between Metrics Master and Wam Capital

Assuming the 90 days trading horizon Metrics Master is expected to generate 1.37 times less return on investment than Wam Capital. But when comparing it to its historical volatility, Metrics Master Income is 1.54 times less risky than Wam Capital. It trades about 0.08 of its potential returns per unit of risk. Wam Capital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Wam Capital on October 8, 2024 and sell it today you would earn a total of  24.00  from holding Wam Capital or generate 17.78% return on investment over 90 days.

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

Metrics Master Income  vs.  Wam Capital

Metrics Master Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metrics Master Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Metrics Master 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

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 Metrics Master and Wam Capital

The main advantage of trading using opposite Metrics Master and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrics Master 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 Metrics Master Income 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.