Correlation Between Westport Fuel and Emeren
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Emeren 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 Emeren 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 Emeren Group, you can compare the effects of market volatilities on Westport Fuel and Emeren 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 Emeren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Emeren.
Diversification Opportunities for Westport Fuel and Emeren
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and Emeren is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Westport Fuel i.e., Westport Fuel and Emeren go up and down completely randomly.
Pair Corralation between Westport Fuel and Emeren
Given the investment horizon of 90 days Westport Fuel Systems is expected to generate 1.52 times more return on investment than Emeren. However, Westport Fuel is 1.52 times more volatile than Emeren Group. It trades about 0.25 of its potential returns per unit of risk. Emeren Group is currently generating about -0.28 per unit of risk. If you would invest 382.00 in Westport Fuel Systems on November 18, 2024 and sell it today you would earn a total of 76.00 from holding Westport Fuel Systems or generate 19.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Emeren Group
Performance |
| Timeline |
| Westport Fuel Systems |
| Emeren Group |
Westport Fuel and Emeren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Emeren
The main advantage of trading using opposite Westport Fuel and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Emeren 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 Emeren will offset losses from the drop in Emeren'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 |
| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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