Correlation Between Westrock Coffee and CHS
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and CHS 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 Westrock Coffee and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and CHS Inc CP, you can compare the effects of market volatilities on Westrock Coffee and CHS 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 Westrock Coffee with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and CHS.
Diversification Opportunities for Westrock Coffee and CHS
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westrock and CHS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and CHS Inc CP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CP and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CP has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and CHS go up and down completely randomly.
Pair Corralation between Westrock Coffee and CHS
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the CHS. In addition to that, Westrock Coffee is 2.6 times more volatile than CHS Inc CP. It trades about -0.04 of its total potential returns per unit of risk. CHS Inc CP is currently generating about -0.01 per unit of volatility. If you would invest 2,950 in CHS Inc CP on September 14, 2024 and sell it today you would lose (86.00) from holding CHS Inc CP or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Westrock Coffee vs. CHS Inc CP
Performance |
| Timeline |
| Westrock Coffee |
| CHS Inc CP |
Westrock Coffee and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and CHS
The main advantage of trading using opposite Westrock Coffee and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| Westrock Coffee vs. General Mills | Westrock Coffee vs. Campbell Soup | Westrock Coffee vs. McCormick Company Incorporated |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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