Correlation Between Wilhelmina and Brambles

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

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

Diversification Opportunities for Wilhelmina and Brambles

-0.39

Correlation Coefficient

Wilhelmina  Brambles

Very good diversification

The 3 months correlation between Wilhelmina and Brambles is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Brambles Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles ADR and Wilhelmina 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 Wilhelmina are associated (or correlated) with Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles ADR has no effect on the direction of Wilhelmina i.e., Wilhelmina and Brambles go up and down completely randomly.

Pair Corralation between Wilhelmina and Brambles

Given the investment horizon of 90 days Wilhelmina is expected to generate 2.63 times less return on investment than Brambles. In addition to that, Wilhelmina is 3.05 times more volatile than Brambles Ltd ADR. It trades about 0.01 of its total potential returns per unit of risk. Brambles Ltd ADR is currently generating about 0.07 per unit of volatility. If you would invest  1,587  in Brambles Ltd ADR on October 26, 2024 and sell it today you would earn a total of  863.00  from holding Brambles Ltd ADR or generate 54.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.56%
Values	Daily Returns

Wilhelmina  vs.  Brambles Ltd ADR

Wilhelmina

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wilhelmina are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Wilhelmina displayed solid returns over the last few months and may actually be approaching a breakup point.

Brambles ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brambles Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Brambles is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilhelmina and Brambles

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

The idea behind Wilhelmina and Brambles Ltd ADR 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.