Correlation Between Allego and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Allego and Westport Fuel 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 Allego and Westport Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allego Inc and Westport Fuel Systems, you can compare the effects of market volatilities on Allego and Westport Fuel 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 Allego with a short position of Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allego and Westport Fuel.
Diversification Opportunities for Allego and Westport Fuel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allego and Westport is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Allego Inc and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems and Allego 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 Allego Inc are associated (or correlated) with Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Allego i.e., Allego and Westport Fuel go up and down completely randomly.
Pair Corralation between Allego and Westport Fuel
If you would invest 345.00 in Westport Fuel Systems on October 20, 2024 and sell it today you would earn a total of 37.00 from holding Westport Fuel Systems or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Allego Inc vs. Westport Fuel Systems
Performance |
| Timeline |
| Allego Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Westport Fuel Systems |
Allego and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allego and Westport Fuel
The main advantage of trading using opposite Allego and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allego position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Allego vs. Lear Corporation | Allego vs. Autoliv | Allego vs. American Axle Manufacturing | Allego vs. Dorman Products |
| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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