Correlation Between Western Acquisition and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and AMCON Distributing 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 Western Acquisition and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and AMCON Distributing, you can compare the effects of market volatilities on Western Acquisition and AMCON Distributing 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 Western Acquisition with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and AMCON Distributing.
Diversification Opportunities for Western Acquisition and AMCON Distributing
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and AMCON is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Western Acquisition i.e., Western Acquisition and AMCON Distributing go up and down completely randomly.
Pair Corralation between Western Acquisition and AMCON Distributing
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 4.96 times less risky than AMCON Distributing. The stock trades about -0.21 of its potential returns per unit of risk. The AMCON Distributing is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,795 in AMCON Distributing on September 25, 2024 and sell it today you would earn a total of 755.00 from holding AMCON Distributing or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. AMCON Distributing
Performance |
| Timeline |
| Western Acquisition |
| AMCON Distributing |
Western Acquisition and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and AMCON Distributing
The main advantage of trading using opposite Western Acquisition and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Western Acquisition vs. Aquagold International | Western Acquisition vs. Morningstar Unconstrained Allocation | Western Acquisition vs. Thrivent High Yield | Western Acquisition vs. Via Renewables |
| AMCON Distributing vs. Macys Inc | AMCON Distributing vs. Wayfair | AMCON Distributing vs. 1StdibsCom | AMCON Distributing vs. AutoNation |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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