Correlation Between Western Investment and New Zealand
Can any of the company-specific risk be diversified away by investing in both Western Investment and New Zealand 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 New Zealand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and New Zealand Energy, you can compare the effects of market volatilities on Western Investment and New Zealand 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 New Zealand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and New Zealand.
Diversification Opportunities for Western Investment and New Zealand
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and New is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and New Zealand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Energy 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 New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Energy has no effect on the direction of Western Investment i.e., Western Investment and New Zealand go up and down completely randomly.
Pair Corralation between Western Investment and New Zealand
Given the investment horizon of 90 days Western Investment is expected to generate 21.72 times less return on investment than New Zealand. But when comparing it to its historical volatility, Western Investment is 10.63 times less risky than New Zealand. It trades about 0.03 of its potential returns per unit of risk. New Zealand Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7.00 in New Zealand Energy on September 8, 2024 and sell it today you would earn a total of 101.00 from holding New Zealand Energy or generate 1442.86% 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. New Zealand Energy
Performance |
| Timeline |
| Western Investment |
| New Zealand Energy |
Western Investment and New Zealand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and New Zealand
The main advantage of trading using opposite Western Investment and New Zealand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, New Zealand 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 New Zealand will offset losses from the drop in New Zealand's long position.| Western Investment vs. Premium Income | Western Investment vs. E L Financial Corp | Western Investment vs. Fairfax Financial Holdings | Western Investment vs. Fairfax Fin Hld |
| New Zealand vs. Fairfax Financial Holdings | New Zealand vs. Financial 15 Split | New Zealand vs. Royal Bank of | New Zealand vs. MAG Silver 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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