Correlation Between Westrock Coffee and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Western Acquisition Ventures, you can compare the effects of market volatilities on Westrock Coffee and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Western Acquisition.
Diversification Opportunities for Westrock Coffee and Western Acquisition
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westrock and Western is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Western Acquisition go up and down completely randomly.
Pair Corralation between Westrock Coffee and Western Acquisition
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Western Acquisition. In addition to that, Westrock Coffee is 1.8 times more volatile than Western Acquisition Ventures. It trades about -0.01 of its total potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of volatility. If you would invest 1,073 in Western Acquisition Ventures on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Western Acquisition Ventures or generate 1.77% 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. Western Acquisition Ventures
Performance |
| Timeline |
| Westrock Coffee |
| Western Acquisition |
Westrock Coffee and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and Western Acquisition
The main advantage of trading using opposite Westrock Coffee and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| Westrock Coffee vs. Campbell Soup | Westrock Coffee vs. ConAgra Foods | Westrock Coffee vs. Hormel Foods | Westrock Coffee vs. Kellanova |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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