Correlation Between Western Midstream and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Western Midstream and Lowes Companies 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 Midstream and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Midstream Partners and Lowes Companies, you can compare the effects of market volatilities on Western Midstream and Lowes Companies 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 Midstream with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Midstream and Lowes Companies.
Diversification Opportunities for Western Midstream and Lowes Companies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Lowes is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Western Midstream Partners and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Western Midstream 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 Midstream Partners are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Western Midstream i.e., Western Midstream and Lowes Companies go up and down completely randomly.
Pair Corralation between Western Midstream and Lowes Companies
Considering the 90-day investment horizon Western Midstream Partners is expected to generate 1.09 times more return on investment than Lowes Companies. However, Western Midstream is 1.09 times more volatile than Lowes Companies. It trades about 0.1 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.06 per unit of risk. If you would invest 2,320 in Western Midstream Partners on September 4, 2024 and sell it today you would earn a total of 1,662 from holding Western Midstream Partners or generate 71.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Midstream Partners vs. Lowes Companies
Performance |
| Timeline |
| Western Midstream |
| Lowes Companies |
Western Midstream and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Midstream and Lowes Companies
The main advantage of trading using opposite Western Midstream and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Midstream position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
| Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Kirklands |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |