Correlation Between Wt Financial and MA Financial
Can any of the company-specific risk be diversified away by investing in both Wt Financial and MA Financial 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 MA Financial 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 MA Financial Group, you can compare the effects of market volatilities on Wt Financial and MA Financial 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wt Financial and MA Financial.
Diversification Opportunities for Wt Financial and MA Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WTL and MAF is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wt Financial Group and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial Group 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of Wt Financial i.e., Wt Financial and MA Financial go up and down completely randomly.
Pair Corralation between Wt Financial and MA Financial
Assuming the 90 days trading horizon Wt Financial Group is expected to under-perform the MA Financial. In addition to that, Wt Financial is 1.5 times more volatile than MA Financial Group. It trades about -0.05 of its total potential returns per unit of risk. MA Financial Group is currently generating about -0.01 per unit of volatility. If you would invest 646.00 in MA Financial Group on September 6, 2024 and sell it today you would lose (7.00) from holding MA Financial Group or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Wt Financial Group vs. MA Financial Group
Performance |
Timeline |
Wt Financial Group |
MA Financial Group |
Wt Financial and MA Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wt Financial and MA Financial
The main advantage of trading using opposite Wt Financial and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wt Financial position performs unexpectedly, MA Financial 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 MA Financial will offset losses from the drop in MA Financial's long position.Wt Financial vs. Westpac Banking | Wt Financial vs. Ecofibre | Wt Financial vs. Adriatic Metals Plc | Wt Financial vs. Australian Dairy Farms |
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Check out your portfolio center.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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