Correlation Between COVANTA and Westrock Coffee
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By analyzing existing cross correlation between COVANTA HLDG P and Westrock Coffee, you can compare the effects of market volatilities on COVANTA 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 COVANTA with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of COVANTA and Westrock Coffee.
Diversification Opportunities for COVANTA and Westrock Coffee
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COVANTA and Westrock is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding COVANTA HLDG P and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and COVANTA 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 COVANTA HLDG P 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 COVANTA i.e., COVANTA and Westrock Coffee go up and down completely randomly.
Pair Corralation between COVANTA and Westrock Coffee
Assuming the 90 days trading horizon COVANTA HLDG P is expected to generate 0.52 times more return on investment than Westrock Coffee. However, COVANTA HLDG P is 1.93 times less risky than Westrock Coffee. It trades about -0.05 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.06 per unit of risk. If you would invest 8,956 in COVANTA HLDG P on September 3, 2024 and sell it today you would lose (921.00) from holding COVANTA HLDG P or give up 10.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.47% |
| Values | Daily Returns |
COVANTA HLDG P vs. Westrock Coffee
Performance |
| Timeline |
| COVANTA HLDG P |
| Westrock Coffee |
COVANTA and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COVANTA and Westrock Coffee
The main advantage of trading using opposite COVANTA and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVANTA 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.The idea behind COVANTA HLDG P and Westrock Coffee pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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