Correlation Between Westshore Terminals and Transalta
Can any of the company-specific risk be diversified away by investing in both Westshore Terminals and Transalta 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 Transalta 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 Transalta A Cum, you can compare the effects of market volatilities on Westshore Terminals and Transalta 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 Transalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and Transalta.
Diversification Opportunities for Westshore Terminals and Transalta
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westshore and Transalta is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Transalta A Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transalta A Cum 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 Transalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transalta A Cum has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Transalta go up and down completely randomly.
Pair Corralation between Westshore Terminals and Transalta
Assuming the 90 days trading horizon Westshore Terminals Investment is expected to under-perform the Transalta. In addition to that, Westshore Terminals is 1.23 times more volatile than Transalta A Cum. It trades about -0.03 of its total potential returns per unit of risk. Transalta A Cum is currently generating about 0.13 per unit of volatility. If you would invest 1,123 in Transalta A Cum on September 14, 2024 and sell it today you would earn a total of 403.00 from holding Transalta A Cum or generate 35.89% 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. Transalta A Cum
Performance |
| Timeline |
| Westshore Terminals |
| Transalta A Cum |
Westshore Terminals and Transalta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westshore Terminals and Transalta
The main advantage of trading using opposite Westshore Terminals and Transalta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westshore Terminals position performs unexpectedly, Transalta 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 Transalta will offset losses from the drop in Transalta'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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