Correlation Between Western Acquisition and Stepan
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Western Acquisition and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Stepan.
Diversification Opportunities for Western Acquisition and Stepan
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Stepan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Western Acquisition i.e., Western Acquisition and Stepan go up and down completely randomly.
Pair Corralation between Western Acquisition and Stepan
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Stepan. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 1.18 times less risky than Stepan. The stock trades about -0.17 of its potential returns per unit of risk. The Stepan Company is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,387 in Stepan Company on August 27, 2024 and sell it today you would earn a total of 393.00 from holding Stepan Company or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Stepan Company
Performance |
| Timeline |
| Western Acquisition |
| Stepan Company |
Western Acquisition and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Stepan
The main advantage of trading using opposite Western Acquisition and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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