Correlation Between United Community and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both United Community and Westrock Coffee 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 United Community and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Community Banks, and Westrock Coffee, you can compare the effects of market volatilities on United Community and Westrock Coffee 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 United Community with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Community and Westrock Coffee.
Diversification Opportunities for United Community and Westrock Coffee
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Westrock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Community Banks, and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and United Community 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 United Community Banks, are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of United Community i.e., United Community and Westrock Coffee go up and down completely randomly.
Pair Corralation between United Community and Westrock Coffee
Considering the 90-day investment horizon United Community Banks, is expected to generate 0.29 times more return on investment than Westrock Coffee. However, United Community Banks, is 3.48 times less risky than Westrock Coffee. It trades about 0.19 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.04 per unit of risk. If you would invest 3,247 in United Community Banks, on September 12, 2024 and sell it today you would earn a total of 156.00 from holding United Community Banks, or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Community Banks, vs. Westrock Coffee
Performance |
| Timeline |
| United Community Banks, |
| Westrock Coffee |
United Community and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Community and Westrock Coffee
The main advantage of trading using opposite United Community and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Community position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| United Community vs. SEI Investments | United Community vs. Dana Inc | United Community vs. MGIC Investment Corp | United Community vs. Gentex |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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