Correlation Between Wt Financial and Australian Foundation

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

By analyzing existing cross correlation between Wt Financial Group and Australian Foundation Investment, you can compare the effects of market volatilities on Wt Financial and Australian Foundation 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 Wt Financial with a short position of Australian Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wt Financial and Australian Foundation.

Diversification Opportunities for Wt Financial and Australian Foundation

-0.43

Correlation Coefficient

Wt Financial  Australian Foundation

Very good diversification

The 3 months correlation between WTL and Australian is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wt Financial Group and Australian Foundation Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Foundation and Wt Financial 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 Wt Financial Group are associated (or correlated) with Australian Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Foundation has no effect on the direction of Wt Financial i.e., Wt Financial and Australian Foundation go up and down completely randomly.

Pair Corralation between Wt Financial and Australian Foundation

Assuming the 90 days trading horizon Wt Financial Group is expected to generate 5.92 times more return on investment than Australian Foundation. However, Wt Financial is 5.92 times more volatile than Australian Foundation Investment. It trades about 0.03 of its potential returns per unit of risk. Australian Foundation Investment is currently generating about 0.02 per unit of risk. If you would invest  7.58  in Wt Financial Group on October 9, 2024 and sell it today you would earn a total of  1.22  from holding Wt Financial Group or generate 16.09% return on investment over 90 days.

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

Wt Financial Group  vs.  Australian Foundation Investme

Wt Financial Group

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wt Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Wt Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Australian Foundation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Foundation Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Australian Foundation 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 Wt Financial and Australian Foundation

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

The idea behind Wt Financial Group and Australian Foundation Investment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.