Correlation Between Western Acquisition and SFL
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and SFL 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 SFL 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 SFL Corporation, you can compare the effects of market volatilities on Western Acquisition and SFL 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 SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and SFL.
Diversification Opportunities for Western Acquisition and SFL
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and SFL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Western Acquisition i.e., Western Acquisition and SFL go up and down completely randomly.
Pair Corralation between Western Acquisition and SFL
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the SFL. In addition to that, Western Acquisition is 1.48 times more volatile than SFL Corporation. It trades about -0.17 of its total potential returns per unit of risk. SFL Corporation is currently generating about 0.08 per unit of volatility. If you would invest 1,077 in SFL Corporation on August 27, 2024 and sell it today you would earn a total of 22.00 from holding SFL Corporation or generate 2.04% 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. SFL Corp.
Performance |
| Timeline |
| Western Acquisition |
| SFL Corporation |
Western Acquisition and SFL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and SFL
The main advantage of trading using opposite Western Acquisition and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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