Correlation Between Westport Fuel and Allego
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Allego 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 Westport Fuel and Allego into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Allego Inc, you can compare the effects of market volatilities on Westport Fuel and Allego 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 Westport Fuel with a short position of Allego. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Allego.
Diversification Opportunities for Westport Fuel and Allego
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westport and Allego is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Allego Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allego Inc and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with Allego. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allego Inc has no effect on the direction of Westport Fuel i.e., Westport Fuel and Allego go up and down completely randomly.
Pair Corralation between Westport Fuel and Allego
Given the investment horizon of 90 days Westport Fuel Systems is expected to under-perform the Allego. But the stock apears to be less risky and, when comparing its historical volatility, Westport Fuel Systems is 4.76 times less risky than Allego. The stock trades about -0.06 of its potential returns per unit of risk. The Allego Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 228.00 in Allego Inc on November 2, 2024 and sell it today you would lose (37.00) from holding Allego Inc or give up 16.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 38.83% |
| Values | Daily Returns |
Westport Fuel Systems vs. Allego Inc
Performance |
| Timeline |
| Westport Fuel Systems |
| Allego Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westport Fuel and Allego Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Allego
The main advantage of trading using opposite Westport Fuel and Allego positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Allego 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 Allego will offset losses from the drop in Allego's long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| Allego vs. Lear Corporation | Allego vs. Autoliv | Allego vs. American Axle Manufacturing | Allego vs. Dorman Products |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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