Correlation Between Westrock Coffee and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Consumer Staples Portfolio, you can compare the effects of market volatilities on Westrock Coffee and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Consumer Staples.
Diversification Opportunities for Westrock Coffee and Consumer Staples
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westrock and Consumer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Consumer Staples go up and down completely randomly.
Pair Corralation between Westrock Coffee and Consumer Staples
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Consumer Staples. In addition to that, Westrock Coffee is 2.38 times more volatile than Consumer Staples Portfolio. It trades about -0.2 of its total potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.03 per unit of volatility. If you would invest 8,958 in Consumer Staples Portfolio on November 26, 2024 and sell it today you would earn a total of 46.00 from holding Consumer Staples Portfolio or generate 0.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Westrock Coffee vs. Consumer Staples Portfolio
Performance |
Timeline |
Westrock Coffee |
Consumer Staples Por |
Westrock Coffee and Consumer Staples Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westrock Coffee and Consumer Staples
The main advantage of trading using opposite Westrock Coffee and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.Westrock Coffee vs. Coffee Holding Co | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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