Correlation Between Western Acquisition and Oak Woods
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Oak Woods 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 Oak Woods 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 Oak Woods Acquisition, you can compare the effects of market volatilities on Western Acquisition and Oak Woods 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 Oak Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Oak Woods.
Diversification Opportunities for Western Acquisition and Oak Woods
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Oak is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Oak Woods Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Woods Acquisition 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 Oak Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Woods Acquisition has no effect on the direction of Western Acquisition i.e., Western Acquisition and Oak Woods go up and down completely randomly.
Pair Corralation between Western Acquisition and Oak Woods
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Oak Woods. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 4.33 times less risky than Oak Woods. The stock trades about -0.05 of its potential returns per unit of risk. The Oak Woods Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Oak Woods Acquisition on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Oak Woods Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Oak Woods Acquisition
Performance |
| Timeline |
| Western Acquisition |
| Oak Woods Acquisition |
Western Acquisition and Oak Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Oak Woods
The main advantage of trading using opposite Western Acquisition and Oak Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Oak Woods 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 Oak Woods will offset losses from the drop in Oak Woods' long position.The idea behind Western Acquisition Ventures and Oak Woods Acquisition 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.| Oak Woods vs. Toro Co | Oak Woods vs. Estee Lauder Companies | Oak Woods vs. Rocky Brands | Oak Woods vs. NioCorp Developments Ltd |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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