Correlation Between Wam Capital and Flagship Investments

Can any of the company-specific risk be diversified away by investing in both Wam Capital and Flagship 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 Flagship 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 Flagship Investments, you can compare the effects of market volatilities on Wam Capital and Flagship 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Capital and Flagship Investments.

Diversification Opportunities for Wam Capital and Flagship Investments

-0.04

Correlation Coefficient

Wam Capital  Flagship Investments

Good diversification

The 3 months correlation between Wam and Flagship is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Wam Capital i.e., Wam Capital and Flagship Investments go up and down completely randomly.

Pair Corralation between Wam Capital and Flagship Investments

Assuming the 90 days trading horizon Wam Capital is expected to generate 0.44 times more return on investment than Flagship Investments. However, Wam Capital is 2.25 times less risky than Flagship Investments. It trades about 0.37 of its potential returns per unit of risk. Flagship Investments is currently generating about -0.11 per unit of risk. If you would invest  151.00  in Wam Capital on October 4, 2024 and sell it today you would earn a total of  9.00  from holding Wam Capital or generate 5.96% return on investment over 90 days.

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

Wam Capital  vs.  Flagship Investments

Wam Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Capital are ranked lower than 7 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Flagship Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wam Capital and Flagship Investments

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

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