Correlation Between Freedom Holding and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Western Midstream 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 Freedom Holding and Western Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Western Midstream Partners, you can compare the effects of market volatilities on Freedom Holding and Western Midstream 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 Freedom Holding with a short position of Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Western Midstream.
Diversification Opportunities for Freedom Holding and Western Midstream
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Western is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream and Freedom Holding 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 Freedom Holding Corp are associated (or correlated) with Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Freedom Holding i.e., Freedom Holding and Western Midstream go up and down completely randomly.
Pair Corralation between Freedom Holding and Western Midstream
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.14 times more return on investment than Western Midstream. However, Freedom Holding is 1.14 times more volatile than Western Midstream Partners. It trades about 0.09 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.1 per unit of risk. If you would invest 8,141 in Freedom Holding Corp on August 26, 2024 and sell it today you would earn a total of 3,606 from holding Freedom Holding Corp or generate 44.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Western Midstream Partners
Performance |
| Timeline |
| Freedom Holding Corp |
| Western Midstream |
Freedom Holding and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Western Midstream
The main advantage of trading using opposite Freedom Holding and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream's long position.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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