Correlation Between Western Sierra and Stepan
Can any of the company-specific risk be diversified away by investing in both Western Sierra and Stepan 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 Sierra and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and Stepan Company, you can compare the effects of market volatilities on Western Sierra and Stepan 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 Sierra with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Stepan.
Diversification Opportunities for Western Sierra and Stepan
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Stepan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Western Sierra 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 Sierra Mining are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Western Sierra i.e., Western Sierra and Stepan go up and down completely randomly.
Pair Corralation between Western Sierra and Stepan
Given the investment horizon of 90 days Western Sierra Mining is expected to under-perform the Stepan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Western Sierra Mining is 1.44 times less risky than Stepan. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Stepan Company is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,811 in Stepan Company on August 29, 2024 and sell it today you would lose (209.00) from holding Stepan Company or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Western Sierra Mining vs. Stepan Company
Performance |
| Timeline |
| Western Sierra Mining |
| Stepan Company |
Western Sierra and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Stepan
The main advantage of trading using opposite Western Sierra and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |