Correlation Between Pengana Private and Wam Leaders

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

By analyzing existing cross correlation between Pengana Private Equity and Wam Leaders, you can compare the effects of market volatilities on Pengana Private and Wam Leaders 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 Pengana Private with a short position of Wam Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengana Private and Wam Leaders.

Diversification Opportunities for Pengana Private and Wam Leaders

0.61

Correlation Coefficient

Pengana Private  Wam Leaders

Poor diversification

The 3 months correlation between Pengana and Wam is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pengana Private Equity and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders and Pengana Private 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 Pengana Private Equity are associated (or correlated) with Wam Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Leaders has no effect on the direction of Pengana Private i.e., Pengana Private and Wam Leaders go up and down completely randomly.

Pair Corralation between Pengana Private and Wam Leaders

Assuming the 90 days trading horizon Pengana Private Equity is expected to under-perform the Wam Leaders. In addition to that, Pengana Private is 1.63 times more volatile than Wam Leaders. It trades about -0.06 of its total potential returns per unit of risk. Wam Leaders is currently generating about -0.02 per unit of volatility. If you would invest  127.00  in Wam Leaders on September 2, 2024 and sell it today you would lose (2.00) from holding Wam Leaders or give up 1.57% of portfolio value over 90 days.

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

Pengana Private Equity  vs.  Wam Leaders

Pengana Private Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wam Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wam Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Wam Leaders 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 Pengana Private and Wam Leaders

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

The idea behind Pengana Private Equity and Wam Leaders 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.