Correlation Between Western Acquisition and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Kura Sushi 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 Kura Sushi 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 Kura Sushi USA, you can compare the effects of market volatilities on Western Acquisition and Kura Sushi 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 Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Kura Sushi.
Diversification Opportunities for Western Acquisition and Kura Sushi
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Kura is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Western Acquisition i.e., Western Acquisition and Kura Sushi go up and down completely randomly.
Pair Corralation between Western Acquisition and Kura Sushi
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Kura Sushi. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 2.77 times less risky than Kura Sushi. The stock trades about -0.05 of its potential returns per unit of risk. The Kura Sushi USA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,981 in Kura Sushi USA on September 2, 2024 and sell it today you would earn a total of 711.00 from holding Kura Sushi USA or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Kura Sushi USA
Performance |
| Timeline |
| Western Acquisition |
| Kura Sushi USA |
Western Acquisition and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Kura Sushi
The main advantage of trading using opposite Western Acquisition and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi's long position.The idea behind Western Acquisition Ventures and Kura Sushi USA 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.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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