Correlation Between WHG REAL and WHG FINVEST

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

By analyzing existing cross correlation between WHG REAL ESTATE and WHG FINVEST SP, you can compare the effects of market volatilities on WHG REAL and WHG FINVEST 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 WHG REAL with a short position of WHG FINVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHG REAL and WHG FINVEST.

Diversification Opportunities for WHG REAL and WHG FINVEST

0.35

Correlation Coefficient

WHG REAL  WHG FINVEST

Weak diversification

The 3 months correlation between WHG and WHG is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding WHG REAL ESTATE and WHG FINVEST SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG FINVEST SP and WHG REAL 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 WHG REAL ESTATE are associated (or correlated) with WHG FINVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG FINVEST SP has no effect on the direction of WHG REAL i.e., WHG REAL and WHG FINVEST go up and down completely randomly.

Pair Corralation between WHG REAL and WHG FINVEST

Assuming the 90 days trading horizon WHG REAL is expected to generate 1.17 times less return on investment than WHG FINVEST. But when comparing it to its historical volatility, WHG REAL ESTATE is 3.04 times less risky than WHG FINVEST. It trades about 0.13 of its potential returns per unit of risk. WHG FINVEST SP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  117,732  in WHG FINVEST SP on December 22, 2024 and sell it today you would earn a total of  8,935  from holding WHG FINVEST SP or generate 7.59% return on investment over 90 days.

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

WHG REAL ESTATE  vs.  WHG FINVEST SP

WHG REAL ESTATE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WHG REAL ESTATE are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, WHG REAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

WHG FINVEST SP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WHG FINVEST SP are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, WHG FINVEST sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WHG REAL and WHG FINVEST

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

The idea behind WHG REAL ESTATE and WHG FINVEST SP 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.