Correlation Between Power Financial and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both Power Financial and Westshore Terminals 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 Power Financial and Westshore Terminals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Financial Corp and Westshore Terminals Investment, you can compare the effects of market volatilities on Power Financial and Westshore Terminals 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 Power Financial with a short position of Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and Westshore Terminals.
Diversification Opportunities for Power Financial and Westshore Terminals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Westshore is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals and Power Financial 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 Power Financial Corp are associated (or correlated) with Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Power Financial i.e., Power Financial and Westshore Terminals go up and down completely randomly.
Pair Corralation between Power Financial and Westshore Terminals
Assuming the 90 days trading horizon Power Financial is expected to generate 3.11 times less return on investment than Westshore Terminals. But when comparing it to its historical volatility, Power Financial Corp is 1.64 times less risky than Westshore Terminals. It trades about 0.05 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,267 in Westshore Terminals Investment on November 1, 2024 and sell it today you would earn a total of 133.00 from holding Westshore Terminals Investment or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Financial Corp vs. Westshore Terminals Investment
Performance |
| Timeline |
| Power Financial Corp |
| Westshore Terminals |
Power Financial and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Financial and Westshore Terminals
The main advantage of trading using opposite Power Financial and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.| Power Financial vs. Great West Lifeco | Power Financial vs. Power Financial Corp | Power Financial vs. Agnico Eagle Mines | Power Financial vs. CI Financial Corp |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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