Correlation Between Westport Fuel and Consumer Discretionary
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Consumer Discretionary 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 Consumer Discretionary 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 Consumer Discretionary Portfolio, you can compare the effects of market volatilities on Westport Fuel and Consumer Discretionary 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 Consumer Discretionary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Consumer Discretionary.
Diversification Opportunities for Westport Fuel and Consumer Discretionary
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westport and Consumer is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Consumer Discretionary Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary 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 Consumer Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of Westport Fuel i.e., Westport Fuel and Consumer Discretionary go up and down completely randomly.
Pair Corralation between Westport Fuel and Consumer Discretionary
Given the investment horizon of 90 days Westport Fuel is expected to generate 1.17 times less return on investment than Consumer Discretionary. In addition to that, Westport Fuel is 1.88 times more volatile than Consumer Discretionary Portfolio. It trades about 0.14 of its total potential returns per unit of risk. Consumer Discretionary Portfolio is currently generating about 0.31 per unit of volatility. If you would invest 6,473 in Consumer Discretionary Portfolio on August 28, 2024 and sell it today you would earn a total of 496.00 from holding Consumer Discretionary Portfolio or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Consumer Discretionary Portfol
Performance |
| Timeline |
| Westport Fuel Systems |
| Consumer Discretionary |
Westport Fuel and Consumer Discretionary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Consumer Discretionary
The main advantage of trading using opposite Westport Fuel and Consumer Discretionary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Consumer Discretionary 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 Consumer Discretionary will offset losses from the drop in Consumer Discretionary'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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