Correlation Between Westport Fuel and LuxUrban Hotels
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and LuxUrban Hotels 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 LuxUrban Hotels 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 LuxUrban Hotels 1300, you can compare the effects of market volatilities on Westport Fuel and LuxUrban Hotels 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 LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and LuxUrban Hotels.
Diversification Opportunities for Westport Fuel and LuxUrban Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and LuxUrban is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 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 LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of Westport Fuel i.e., Westport Fuel and LuxUrban Hotels go up and down completely randomly.
Pair Corralation between Westport Fuel and LuxUrban Hotels
Given the investment horizon of 90 days Westport Fuel Systems is expected to generate 0.4 times more return on investment than LuxUrban Hotels. However, Westport Fuel Systems is 2.47 times less risky than LuxUrban Hotels. It trades about 0.24 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.37 per unit of risk. If you would invest 369.00 in Westport Fuel Systems on October 31, 2024 and sell it today you would earn a total of 74.00 from holding Westport Fuel Systems or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. LuxUrban Hotels 1300
Performance |
| Timeline |
| Westport Fuel Systems |
| LuxUrban Hotels 1300 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westport Fuel and LuxUrban Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and LuxUrban Hotels
The main advantage of trading using opposite Westport Fuel and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, LuxUrban Hotels 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 LuxUrban Hotels will offset losses from the drop in LuxUrban Hotels' long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| LuxUrban Hotels vs. Perseus Mining Limited | LuxUrban Hotels vs. Hunter Creek Mining | LuxUrban Hotels vs. Fernhill Beverage | LuxUrban Hotels vs. Ingredion Incorporated |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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