Correlation Between Oatly Group and West Red
Can any of the company-specific risk be diversified away by investing in both Oatly Group and West Red 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 Oatly Group and West Red into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oatly Group AB and West Red Lake, you can compare the effects of market volatilities on Oatly Group and West Red 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 Oatly Group with a short position of West Red. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and West Red.
Diversification Opportunities for Oatly Group and West Red
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oatly and West is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake and Oatly Group 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 Oatly Group AB are associated (or correlated) with West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of Oatly Group i.e., Oatly Group and West Red go up and down completely randomly.
Pair Corralation between Oatly Group and West Red
Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the West Red. In addition to that, Oatly Group is 1.02 times more volatile than West Red Lake. It trades about -0.04 of its total potential returns per unit of risk. West Red Lake is currently generating about 0.02 per unit of volatility. If you would invest 40.00 in West Red Lake on October 11, 2024 and sell it today you would earn a total of 0.00 from holding West Red Lake or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oatly Group AB vs. West Red Lake
Performance |
| Timeline |
| Oatly Group AB |
| West Red Lake |
Oatly Group and West Red Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oatly Group and West Red
The main advantage of trading using opposite Oatly Group and West Red positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group position performs unexpectedly, West Red 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 Red will offset losses from the drop in West Red's long position.| Oatly Group vs. Monster Beverage Corp | Oatly Group vs. Vita Coco | Oatly Group vs. PepsiCo | Oatly Group vs. The Coca Cola |
| West Red vs. Viemed Healthcare | West Red vs. Aquestive Therapeutics | West Red vs. LENSAR Inc | West Red vs. Oatly Group AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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