Correlation Between Navigator Global and West African
Can any of the company-specific risk be diversified away by investing in both Navigator Global and West African 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 Navigator Global and West African into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Navigator Global Investments and West African Resources, you can compare the effects of market volatilities on Navigator Global and West African 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 Navigator Global with a short position of West African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Global and West African.
Diversification Opportunities for Navigator Global and West African
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Navigator and West is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments and West African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West African Resources and Navigator Global 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 Navigator Global Investments are associated (or correlated) with West African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West African Resources has no effect on the direction of Navigator Global i.e., Navigator Global and West African go up and down completely randomly.
Pair Corralation between Navigator Global and West African
Assuming the 90 days trading horizon Navigator Global is expected to generate 1.11 times less return on investment than West African. But when comparing it to its historical volatility, Navigator Global Investments is 1.3 times less risky than West African. It trades about 0.07 of its potential returns per unit of risk. West African Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 89.00 in West African Resources on September 4, 2024 and sell it today you would earn a total of 57.00 from holding West African Resources or generate 64.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Navigator Global Investments vs. West African Resources
Performance |
| Timeline |
| Navigator Global Inv |
| West African Resources |
Navigator Global and West African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navigator Global and West African
The main advantage of trading using opposite Navigator Global and West African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Global position performs unexpectedly, West African 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 West African will offset losses from the drop in West African's long position.| Navigator Global vs. Westpac Banking | Navigator Global vs. Ecofibre | Navigator Global vs. Adriatic Metals Plc | Navigator Global vs. Australian Dairy Farms |
| West African vs. Hutchison Telecommunications | West African vs. Computershare | West African vs. Queste Communications | West African vs. Farm Pride Foods |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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