Correlation Between Western Investment and Aya Gold
Can any of the company-specific risk be diversified away by investing in both Western Investment and Aya Gold 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 Aya Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Aya Gold Silver, you can compare the effects of market volatilities on Western Investment and Aya Gold 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 Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Aya Gold.
Diversification Opportunities for Western Investment and Aya Gold
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Aya is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver 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 Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of Western Investment i.e., Western Investment and Aya Gold go up and down completely randomly.
Pair Corralation between Western Investment and Aya Gold
Given the investment horizon of 90 days Western Investment is expected to generate 0.32 times more return on investment than Aya Gold. However, Western Investment is 3.1 times less risky than Aya Gold. It trades about -0.12 of its potential returns per unit of risk. Aya Gold Silver is currently generating about -0.22 per unit of risk. If you would invest 42.00 in Western Investment on August 27, 2024 and sell it today you would lose (2.00) from holding Western Investment or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Aya Gold Silver
Performance |
| Timeline |
| Western Investment |
| Aya Gold Silver |
Western Investment and Aya Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Aya Gold
The main advantage of trading using opposite Western Investment and Aya Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Aya Gold 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 Aya Gold will offset losses from the drop in Aya Gold's long position.| Western Investment vs. NVIDIA CDR | Western Investment vs. Apple Inc CDR | Western Investment vs. Microsoft Corp CDR | Western Investment vs. Amazon CDR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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