Correlation Between Wcm Mid and Investment Managers

Can any of the company-specific risk be diversified away by investing in both Wcm Mid and Investment Managers 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 Wcm Mid and Investment Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wcm Mid Cap and Investment Managers Series, you can compare the effects of market volatilities on Wcm Mid and Investment Managers 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 Wcm Mid with a short position of Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wcm Mid and Investment Managers.

Diversification Opportunities for Wcm Mid and Investment Managers

0.73

Correlation Coefficient

Wcm Mid  Investment Managers

Poor diversification

The 3 months correlation between Wcm and Investment is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wcm Mid Cap and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers and Wcm Mid 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 Wcm Mid Cap are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Wcm Mid i.e., Wcm Mid and Investment Managers go up and down completely randomly.

Pair Corralation between Wcm Mid and Investment Managers

Assuming the 90 days horizon Wcm Mid Cap is expected to under-perform the Investment Managers. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wcm Mid Cap is 1.33 times less risky than Investment Managers. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Investment Managers Series is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Investment Managers Series on December 30, 2024 and sell it today you would lose (33.00) from holding Investment Managers Series or give up 2.32% of portfolio value over 90 days.

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

Wcm Mid Cap  vs.  Investment Managers Series

Wcm Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wcm Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wcm Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Investment Managers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investment Managers Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Investment Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wcm Mid and Investment Managers

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

The idea behind Wcm Mid Cap and Investment Managers Series 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.