Correlation Between Distoken Acquisition and Westwood Holdings

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

By analyzing existing cross correlation between Distoken Acquisition and Westwood Holdings Group, you can compare the effects of market volatilities on Distoken Acquisition and Westwood Holdings 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 Distoken Acquisition with a short position of Westwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distoken Acquisition and Westwood Holdings.

Diversification Opportunities for Distoken Acquisition and Westwood Holdings

-0.15

Correlation Coefficient

Distoken Acquisition  Westwood Holdings

Good diversification

The 3 months correlation between Distoken and Westwood is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and Westwood Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Holdings and Distoken Acquisition 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 Distoken Acquisition are associated (or correlated) with Westwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Holdings has no effect on the direction of Distoken Acquisition i.e., Distoken Acquisition and Westwood Holdings go up and down completely randomly.

Pair Corralation between Distoken Acquisition and Westwood Holdings

Assuming the 90 days horizon Distoken Acquisition is expected to generate 6.93 times more return on investment than Westwood Holdings. However, Distoken Acquisition is 6.93 times more volatile than Westwood Holdings Group. It trades about 0.16 of its potential returns per unit of risk. Westwood Holdings Group is currently generating about 0.15 per unit of risk. If you would invest  1.77  in Distoken Acquisition on December 30, 2024 and sell it today you would earn a total of  0.82  from holding Distoken Acquisition or generate 46.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.55%
Values	Daily Returns

Distoken Acquisition  vs.  Westwood Holdings Group

Distoken Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Distoken Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Westwood Holdings

Risk-Adjusted Performance

Good

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

Pair Trading with Distoken Acquisition and Westwood Holdings

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

The idea behind Distoken Acquisition and Westwood Holdings Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.