Correlation Between Western Investment and NGEx Minerals
Can any of the company-specific risk be diversified away by investing in both Western Investment and NGEx Minerals 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 NGEx Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and NGEx Minerals, you can compare the effects of market volatilities on Western Investment and NGEx Minerals 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 NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and NGEx Minerals.
Diversification Opportunities for Western Investment and NGEx Minerals
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and NGEx is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Western Investment i.e., Western Investment and NGEx Minerals go up and down completely randomly.
Pair Corralation between Western Investment and NGEx Minerals
Given the investment horizon of 90 days Western Investment is expected to generate 1.08 times more return on investment than NGEx Minerals. However, Western Investment is 1.08 times more volatile than NGEx Minerals. It trades about 0.07 of its potential returns per unit of risk. NGEx Minerals is currently generating about -0.01 per unit of risk. If you would invest 63.00 in Western Investment on November 8, 2024 and sell it today you would earn a total of 2.00 from holding Western Investment or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. NGEx Minerals
Performance |
| Timeline |
| Western Investment |
| NGEx Minerals |
Western Investment and NGEx Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and NGEx Minerals
The main advantage of trading using opposite Western Investment and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, NGEx Minerals 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 NGEx Minerals will offset losses from the drop in NGEx Minerals' long position.| Western Investment vs. Rocky Mountain Liquor | Western Investment vs. Nova Leap Health | Western Investment vs. Leveljump Healthcare Corp | Western Investment vs. Algoma Steel Group |
| NGEx Minerals vs. Champion Gaming Group | NGEx Minerals vs. 2028 Investment Grade | NGEx Minerals vs. Quipt Home Medical | NGEx Minerals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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