Correlation Between Allied Gaming and Westrock Coffee

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

By analyzing existing cross correlation between Allied Gaming Entertainment and Westrock Coffee, you can compare the effects of market volatilities on Allied Gaming and Westrock Coffee 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 Allied Gaming with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Gaming and Westrock Coffee.

Diversification Opportunities for Allied Gaming and Westrock Coffee

-0.16

Correlation Coefficient

Allied Gaming  Westrock Coffee

Good diversification

The 3 months correlation between Allied and Westrock is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Allied Gaming 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 Allied Gaming Entertainment are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Allied Gaming i.e., Allied Gaming and Westrock Coffee go up and down completely randomly.

Pair Corralation between Allied Gaming and Westrock Coffee

If you would invest  198.00  in Westrock Coffee on September 14, 2024 and sell it today you would lose (6.00) from holding Westrock Coffee or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.35%
Values	Daily Returns

Allied Gaming Entertainment  vs.  Westrock Coffee

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Allied Gaming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Westrock Coffee may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Allied Gaming and Westrock Coffee

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

The idea behind Allied Gaming Entertainment and Westrock Coffee 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.