Correlation Between United States and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both United States and Western Acquisition 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 United States and Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Western Acquisition Ventures, you can compare the effects of market volatilities on United States and Western Acquisition 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 United States with a short position of Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Western Acquisition.
Diversification Opportunities for United States and Western Acquisition
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Western is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition and United States 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 United States Steel are associated (or correlated) with Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of United States i.e., United States and Western Acquisition go up and down completely randomly.
Pair Corralation between United States and Western Acquisition
Taking into account the 90-day investment horizon United States Steel is expected to generate 2.1 times more return on investment than Western Acquisition. However, United States is 2.1 times more volatile than Western Acquisition Ventures. It trades about 0.02 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of risk. If you would invest 3,597 in United States Steel on September 4, 2024 and sell it today you would earn a total of 170.00 from holding United States Steel or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Western Acquisition Ventures
Performance |
| Timeline |
| United States Steel |
| Western Acquisition |
United States and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Western Acquisition
The main advantage of trading using opposite United States and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| United States vs. Constellium Nv | United States vs. Century Aluminum | United States vs. China Hongqiao Group | United States vs. Kaiser Aluminum |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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