Correlation Between Western Investment and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both Western Investment and Westshore Terminals 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 Westshore Terminals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Westshore Terminals Investment, you can compare the effects of market volatilities on Western Investment and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Westshore Terminals.
Diversification Opportunities for Western Investment and Westshore Terminals
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Westshore is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Western Investment i.e., Western Investment and Westshore Terminals go up and down completely randomly.
Pair Corralation between Western Investment and Westshore Terminals
Given the investment horizon of 90 days Western Investment is expected to generate 4.96 times more return on investment than Westshore Terminals. However, Western Investment is 4.96 times more volatile than Westshore Terminals Investment. It trades about 0.07 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.22 per unit of risk. If you would invest 42.00 in Western Investment on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Western Investment or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Westshore Terminals Investment
Performance |
| Timeline |
| Western Investment |
| Westshore Terminals |
Western Investment and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Westshore Terminals
The main advantage of trading using opposite Western Investment and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.| Western Investment vs. Colliers International Group | Western Investment vs. Altus Group Limited | Western Investment vs. Harvest Global REIT | Western Investment vs. International Zeolite Corp |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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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