Correlation Between Western Investment and FPX Nickel
Can any of the company-specific risk be diversified away by investing in both Western Investment and FPX Nickel 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 FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and FPX Nickel Corp, you can compare the effects of market volatilities on Western Investment and FPX Nickel 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 FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and FPX Nickel.
Diversification Opportunities for Western Investment and FPX Nickel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and FPX is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp 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 FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Western Investment i.e., Western Investment and FPX Nickel go up and down completely randomly.
Pair Corralation between Western Investment and FPX Nickel
Given the investment horizon of 90 days Western Investment is expected to generate 1.4 times more return on investment than FPX Nickel. However, Western Investment is 1.4 times more volatile than FPX Nickel Corp. It trades about 0.13 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about 0.02 per unit of risk. If you would invest 42.00 in Western Investment on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Western Investment or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. FPX Nickel Corp
Performance |
| Timeline |
| Western Investment |
| FPX Nickel Corp |
Western Investment and FPX Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and FPX Nickel
The main advantage of trading using opposite Western Investment and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, FPX Nickel 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 FPX Nickel will offset losses from the drop in FPX Nickel's long position.| Western Investment vs. Westshore Terminals Investment | Western Investment vs. Faction Investment Group | Western Investment vs. Economic Investment Trust | Western Investment vs. CNJ Capital Investments |
| FPX Nickel vs. Plaza Retail REIT | FPX Nickel vs. Quorum Information Technologies | FPX Nickel vs. Air Canada | FPX Nickel vs. Western Investment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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