Correlation Between Wam Capital and Carlton Investments

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

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

Diversification Opportunities for Wam Capital and Carlton Investments

0.17

Correlation Coefficient

Wam Capital  Carlton Investments

Average diversification

The 3 months correlation between Wam and Carlton is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Wam Capital 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 Wam Capital are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Wam Capital i.e., Wam Capital and Carlton Investments go up and down completely randomly.

Pair Corralation between Wam Capital and Carlton Investments

Assuming the 90 days trading horizon Wam Capital is expected to generate 1.43 times less return on investment than Carlton Investments. But when comparing it to its historical volatility, Wam Capital is 1.45 times less risky than Carlton Investments. It trades about 0.26 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,080  in Carlton Investments on November 28, 2024 and sell it today you would earn a total of  203.00  from holding Carlton Investments or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Wam Capital  vs.  Carlton Investments

Wam Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Wam Capital may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Carlton Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Carlton Investments may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Wam Capital and Carlton Investments

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

The idea behind Wam Capital and Carlton Investments 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..