Correlation Between Western Acquisition and PRA
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and PRA 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 PRA 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 PRA Group, you can compare the effects of market volatilities on Western Acquisition and PRA 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 PRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and PRA.
Diversification Opportunities for Western Acquisition and PRA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and PRA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and PRA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRA Group 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 PRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRA Group has no effect on the direction of Western Acquisition i.e., Western Acquisition and PRA go up and down completely randomly.
Pair Corralation between Western Acquisition and PRA
Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.67 times more return on investment than PRA. However, Western Acquisition Ventures is 1.48 times less risky than PRA. It trades about 0.05 of its potential returns per unit of risk. PRA Group is currently generating about -0.01 per unit of risk. If you would invest 1,065 in Western Acquisition Ventures on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Western Acquisition Ventures or generate 3.76% 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. PRA Group
Performance |
| Timeline |
| Western Acquisition |
| PRA Group |
Western Acquisition and PRA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and PRA
The main advantage of trading using opposite Western Acquisition and PRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, PRA 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 PRA will offset losses from the drop in PRA's long position.| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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