Correlation Between Wildcat Resources and Qantas Airways

Can any of the company-specific risk be diversified away by investing in both Wildcat Resources and Qantas Airways 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 Wildcat Resources and Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Wildcat Resources and Qantas Airways

-0.21

Correlation Coefficient

Wildcat Resources  Qantas Airways

Very good diversification

The 3 months correlation between Wildcat and Qantas is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wildcat Resources and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways and Wildcat Resources 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 Wildcat Resources are associated (or correlated) with Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Wildcat Resources i.e., Wildcat Resources and Qantas Airways go up and down completely randomly.

Pair Corralation between Wildcat Resources and Qantas Airways

Assuming the 90 days trading horizon Wildcat Resources is expected to under-perform the Qantas Airways. In addition to that, Wildcat Resources is 2.26 times more volatile than Qantas Airways. It trades about -0.06 of its total potential returns per unit of risk. Qantas Airways is currently generating about 0.02 per unit of volatility. If you would invest  891.00  in Qantas Airways on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Qantas Airways or generate 1.23% return on investment over 90 days.

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

Wildcat Resources  vs.  Qantas Airways

Wildcat Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wildcat Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Qantas Airways

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Qantas Airways 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 Wildcat Resources and Qantas Airways

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

The idea behind Wildcat Resources and Qantas Airways 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.