Correlation Between Westrock Coffee and La Rosa
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and La Rosa 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 La Rosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and La Rosa Holdings, you can compare the effects of market volatilities on Westrock Coffee and La Rosa 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 La Rosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and La Rosa.
Diversification Opportunities for Westrock Coffee and La Rosa
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westrock and LRHC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa Holdings 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 La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and La Rosa go up and down completely randomly.
Pair Corralation between Westrock Coffee and La Rosa
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the La Rosa. But the stock apears to be less risky and, when comparing its historical volatility, Westrock Coffee is 5.5 times less risky than La Rosa. The stock trades about -0.03 of its potential returns per unit of risk. The La Rosa Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 171.00 in La Rosa Holdings on September 12, 2024 and sell it today you would lose (102.80) from holding La Rosa Holdings or give up 60.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westrock Coffee vs. La Rosa Holdings
Performance |
| Timeline |
| Westrock Coffee |
| La Rosa Holdings |
Westrock Coffee and La Rosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and La Rosa
The main advantage of trading using opposite Westrock Coffee and La Rosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, La Rosa 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 La Rosa will offset losses from the drop in La Rosa's long position.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
| La Rosa vs. Boston Beer | La Rosa vs. Westrock Coffee | La Rosa vs. Compania Cervecerias Unidas | La Rosa vs. Siriuspoint |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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