Correlation Between Westshore Terminals and Acadian Timber
Can any of the company-specific risk be diversified away by investing in both Westshore Terminals and Acadian Timber 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 Westshore Terminals and Acadian Timber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westshore Terminals Investment and Acadian Timber Corp, you can compare the effects of market volatilities on Westshore Terminals and Acadian Timber 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 Westshore Terminals with a short position of Acadian Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and Acadian Timber.
Diversification Opportunities for Westshore Terminals and Acadian Timber
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westshore and Acadian is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Acadian Timber Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Timber Corp and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with Acadian Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Timber Corp has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Acadian Timber go up and down completely randomly.
Pair Corralation between Westshore Terminals and Acadian Timber
Assuming the 90 days trading horizon Westshore Terminals Investment is expected to generate 1.05 times more return on investment than Acadian Timber. However, Westshore Terminals is 1.05 times more volatile than Acadian Timber Corp. It trades about 0.28 of its potential returns per unit of risk. Acadian Timber Corp is currently generating about 0.03 per unit of risk. If you would invest 2,307 in Westshore Terminals Investment on September 3, 2024 and sell it today you would earn a total of 119.00 from holding Westshore Terminals Investment or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westshore Terminals Investment vs. Acadian Timber Corp
Performance |
| Timeline |
| Westshore Terminals |
| Acadian Timber Corp |
Westshore Terminals and Acadian Timber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westshore Terminals and Acadian Timber
The main advantage of trading using opposite Westshore Terminals and Acadian Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westshore Terminals position performs unexpectedly, Acadian Timber 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 Acadian Timber will offset losses from the drop in Acadian Timber's long position.| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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