Correlation Between Western Investment and Happy Creek
Can any of the company-specific risk be diversified away by investing in both Western Investment and Happy Creek 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 Happy Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Happy Creek Minerals, you can compare the effects of market volatilities on Western Investment and Happy Creek 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 Happy Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Happy Creek.
Diversification Opportunities for Western Investment and Happy Creek
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Happy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Happy Creek Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Happy Creek Minerals 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 Happy Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Happy Creek Minerals has no effect on the direction of Western Investment i.e., Western Investment and Happy Creek go up and down completely randomly.
Pair Corralation between Western Investment and Happy Creek
Given the investment horizon of 90 days Western Investment is expected to generate 0.44 times more return on investment than Happy Creek. However, Western Investment is 2.28 times less risky than Happy Creek. It trades about 0.19 of its potential returns per unit of risk. Happy Creek Minerals is currently generating about 0.04 per unit of risk. If you would invest 53.00 in Western Investment on October 21, 2024 and sell it today you would earn a total of 6.00 from holding Western Investment or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Western Investment vs. Happy Creek Minerals
Performance |
| Timeline |
| Western Investment |
| Happy Creek Minerals |
Western Investment and Happy Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Happy Creek
The main advantage of trading using opposite Western Investment and Happy Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Happy Creek 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 Happy Creek will offset losses from the drop in Happy Creek's long position.| Western Investment vs. Maple Leaf Foods | Western Investment vs. Nova Leap Health | Western Investment vs. Storage Vault Canada | Western Investment vs. Leading Edge Materials |
| Happy Creek vs. Titanium Transportation Group | Happy Creek vs. Western Investment | Happy Creek vs. Maple Leaf Foods | Happy Creek vs. Economic Investment Trust |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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