Correlation Between Western Investment and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Western Investment and Advanced Micro 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 Western Investment and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Advanced Micro Devices, you can compare the effects of market volatilities on Western Investment and Advanced Micro 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 Western Investment with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Advanced Micro.
Diversification Opportunities for Western Investment and Advanced Micro
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Advanced is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Western Investment 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 Western Investment are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Western Investment i.e., Western Investment and Advanced Micro go up and down completely randomly.
Pair Corralation between Western Investment and Advanced Micro
Given the investment horizon of 90 days Western Investment is expected to generate 1.37 times more return on investment than Advanced Micro. However, Western Investment is 1.37 times more volatile than Advanced Micro Devices. It trades about 0.05 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.03 per unit of risk. If you would invest 37.00 in Western Investment on November 28, 2024 and sell it today you would earn a total of 30.00 from holding Western Investment or generate 81.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Advanced Micro Devices
Performance |
| Timeline |
| Western Investment |
| Advanced Micro Devices |
Western Investment and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Advanced Micro
The main advantage of trading using opposite Western Investment and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Western Investment vs. Firan Technology Group | Western Investment vs. Westshore Terminals Investment | Western Investment vs. Calian Technologies | Western Investment vs. Questor Technology |
| Advanced Micro vs. Northstar Clean Technologies | Advanced Micro vs. Major Drilling Group | Advanced Micro vs. Quorum Information Technologies | Advanced Micro vs. Goodfood Market Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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