Correlation Between Western Investment and Sun Peak
Can any of the company-specific risk be diversified away by investing in both Western Investment and Sun Peak 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 Sun Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Sun Peak Metals, you can compare the effects of market volatilities on Western Investment and Sun Peak 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 Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Sun Peak.
Diversification Opportunities for Western Investment and Sun Peak
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Sun is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Western Investment i.e., Western Investment and Sun Peak go up and down completely randomly.
Pair Corralation between Western Investment and Sun Peak
Given the investment horizon of 90 days Western Investment is expected to generate 0.63 times more return on investment than Sun Peak. However, Western Investment is 1.58 times less risky than Sun Peak. It trades about 0.2 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.03 per unit of risk. If you would invest 47.00 in Western Investment on October 30, 2024 and sell it today you would earn a total of 12.00 from holding Western Investment or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Sun Peak Metals
Performance |
| Timeline |
| Western Investment |
| Sun Peak Metals |
Western Investment and Sun Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Sun Peak
The main advantage of trading using opposite Western Investment and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Sun Peak 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 Sun Peak will offset losses from the drop in Sun Peak's long position.| Western Investment vs. Uniteds Limited | Western Investment vs. Economic Investment Trust | Western Investment vs. Clairvest Group | Western Investment vs. Cogeco Inc |
| Sun Peak vs. Slate Grocery REIT | Sun Peak vs. Sparx Technology | Sun Peak vs. Maple Leaf Foods | Sun Peak vs. Atrium Mortgage 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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