Correlation Between Wam Capital and Metrics Master

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

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

Diversification Opportunities for Wam Capital and Metrics Master

0.49

Correlation Coefficient

Wam Capital  Metrics Master

Very weak diversification

The 3 months correlation between Wam and Metrics is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Metrics Master Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrics Master Income 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 Metrics Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrics Master Income has no effect on the direction of Wam Capital i.e., Wam Capital and Metrics Master go up and down completely randomly.

Pair Corralation between Wam Capital and Metrics Master

Assuming the 90 days trading horizon Wam Capital is expected to generate 1.54 times more return on investment than Metrics Master. However, Wam Capital is 1.54 times more volatile than Metrics Master Income. It trades about 0.07 of its potential returns per unit of risk. Metrics Master Income is currently generating about 0.08 per unit of risk. 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

Wam Capital  vs.  Metrics Master Income

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.

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.

Pair Trading with Wam Capital and Metrics Master

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

The idea behind Wam Capital and Metrics Master Income 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.