Correlation Between Algoma Steel and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Westrock Coffee 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 Algoma Steel and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Westrock Coffee, you can compare the effects of market volatilities on Algoma Steel and Westrock Coffee 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 Algoma Steel with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Westrock Coffee.
Diversification Opportunities for Algoma Steel and Westrock Coffee
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algoma and Westrock is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Algoma Steel 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 Algoma Steel Group are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Algoma Steel i.e., Algoma Steel and Westrock Coffee go up and down completely randomly.
Pair Corralation between Algoma Steel and Westrock Coffee
If you would invest 124.00 in Algoma Steel Group on November 4, 2024 and sell it today you would earn a total of 5.00 from holding Algoma Steel Group or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Westrock Coffee
Performance |
| Timeline |
| Algoma Steel Group |
| Westrock Coffee |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Algoma Steel and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Westrock Coffee
The main advantage of trading using opposite Algoma Steel and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
| Westrock Coffee vs. Algoma Steel Group | Westrock Coffee vs. Evolv Technologies Holdings | Westrock Coffee vs. Landsea Homes |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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