Correlation Between WiseTech Global and Black Rock

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

By analyzing existing cross correlation between WiseTech Global Limited and Black Rock Mining, you can compare the effects of market volatilities on WiseTech Global and Black Rock 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 WiseTech Global with a short position of Black Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Black Rock.

Diversification Opportunities for WiseTech Global and Black Rock

0.02

Correlation Coefficient

WiseTech Global  Black Rock

Significant diversification

The 3 months correlation between WiseTech and Black is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Black Rock Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Rock Mining and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Black Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Rock Mining has no effect on the direction of WiseTech Global i.e., WiseTech Global and Black Rock go up and down completely randomly.

Pair Corralation between WiseTech Global and Black Rock

Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 0.68 times more return on investment than Black Rock. However, WiseTech Global Limited is 1.47 times less risky than Black Rock. It trades about 0.09 of its potential returns per unit of risk. Black Rock Mining is currently generating about -0.09 per unit of risk. If you would invest  6,690  in WiseTech Global Limited on September 14, 2024 and sell it today you would earn a total of  5,452  from holding WiseTech Global Limited or generate 81.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

WiseTech Global Limited  vs.  Black Rock Mining

WiseTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseTech Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, WiseTech Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with WiseTech Global and Black Rock

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

The idea behind WiseTech Global Limited and Black Rock Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.