Correlation Between WESTERN NEW and WESTERN LITHIUM

Can any of the company-specific risk be diversified away by investing in both WESTERN NEW and WESTERN LITHIUM 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 NEW and WESTERN LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESTERN NEW ENGL and WESTERN LITHIUM USA, you can compare the effects of market volatilities on WESTERN NEW and WESTERN LITHIUM 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 NEW with a short position of WESTERN LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN NEW and WESTERN LITHIUM.

Diversification Opportunities for WESTERN NEW and WESTERN LITHIUM

0.0

Correlation Coefficient

WESTERN NEW  WESTERN LITHIUM

Pay attention - limited upside

The 3 months correlation between WESTERN and WESTERN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN NEW ENGL and WESTERN LITHIUM USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN LITHIUM USA and WESTERN NEW 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 NEW ENGL are associated (or correlated) with WESTERN LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN LITHIUM USA has no effect on the direction of WESTERN NEW i.e., WESTERN NEW and WESTERN LITHIUM go up and down completely randomly.

Pair Corralation between WESTERN NEW and WESTERN LITHIUM

If you would invest  773.00  in WESTERN NEW ENGL on October 23, 2024 and sell it today you would earn a total of  97.00  from holding WESTERN NEW ENGL or generate 12.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

WESTERN NEW ENGL  vs.  WESTERN LITHIUM USA

WESTERN NEW ENGL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN NEW ENGL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WESTERN NEW reported solid returns over the last few months and may actually be approaching a breakup point.

WESTERN LITHIUM USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN LITHIUM USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WESTERN LITHIUM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WESTERN NEW and WESTERN LITHIUM

The main advantage of trading using opposite WESTERN NEW and WESTERN LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN NEW position performs unexpectedly, WESTERN LITHIUM 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 LITHIUM will offset losses from the drop in WESTERN LITHIUM's long position.

The idea behind WESTERN NEW ENGL and WESTERN LITHIUM USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.