Correlation Between Westrock Coffee and Valvoline
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and Valvoline 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 Valvoline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Valvoline, you can compare the effects of market volatilities on Westrock Coffee and Valvoline 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 Valvoline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Valvoline.
Diversification Opportunities for Westrock Coffee and Valvoline
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westrock and Valvoline is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline 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 Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Valvoline go up and down completely randomly.
Pair Corralation between Westrock Coffee and Valvoline
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Valvoline. In addition to that, Westrock Coffee is 1.5 times more volatile than Valvoline. It trades about -0.01 of its total potential returns per unit of risk. Valvoline is currently generating about 0.04 per unit of volatility. If you would invest 3,511 in Valvoline on September 2, 2024 and sell it today you would earn a total of 460.00 from holding Valvoline or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westrock Coffee vs. Valvoline
Performance |
| Timeline |
| Westrock Coffee |
| Valvoline |
Westrock Coffee and Valvoline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and Valvoline
The main advantage of trading using opposite Westrock Coffee and Valvoline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, Valvoline 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 Valvoline will offset losses from the drop in Valvoline's long position.| Westrock Coffee vs. Campbell Soup | Westrock Coffee vs. ConAgra Foods | Westrock Coffee vs. Hormel Foods | Westrock Coffee vs. Kellanova |
| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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