Correlation Between Slate Grocery and Western Investment
Can any of the company-specific risk be diversified away by investing in both Slate Grocery and Western Investment 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 Slate Grocery and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Slate Grocery REIT and Western Investment, you can compare the effects of market volatilities on Slate Grocery and Western Investment 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 Slate Grocery with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and Western Investment.
Diversification Opportunities for Slate Grocery and Western Investment
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Slate and Western is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Slate Grocery i.e., Slate Grocery and Western Investment go up and down completely randomly.
Pair Corralation between Slate Grocery and Western Investment
Assuming the 90 days trading horizon Slate Grocery REIT is expected to under-perform the Western Investment. But the stock apears to be less risky and, when comparing its historical volatility, Slate Grocery REIT is 3.46 times less risky than Western Investment. The stock trades about -0.24 of its potential returns per unit of risk. The Western Investment is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Western Investment on September 24, 2024 and sell it today you would earn a total of 13.00 from holding Western Investment or generate 32.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Slate Grocery REIT vs. Western Investment
Performance |
| Timeline |
| Slate Grocery REIT |
| Western Investment |
Slate Grocery and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Slate Grocery and Western Investment
The main advantage of trading using opposite Slate Grocery and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slate Grocery position performs unexpectedly, Western Investment 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 Investment will offset losses from the drop in Western Investment's long position.| Slate Grocery vs. MAG Silver Corp | Slate Grocery vs. Blackrock Silver Corp | Slate Grocery vs. Globex Mining Enterprises | Slate Grocery vs. Advent Wireless |
| Western Investment vs. Maple Leaf Foods | Western Investment vs. Canlan Ice Sports | Western Investment vs. HPQ Silicon Resources | Western Investment vs. Slate Grocery REIT |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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