Correlation Between Eastwood Bio and Western Investment

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

By analyzing existing cross correlation between Eastwood Bio Medical Canada and Western Investment, you can compare the effects of market volatilities on Eastwood Bio and Western Investment 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 Eastwood Bio with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Western Investment.

Diversification Opportunities for Eastwood Bio and Western Investment

0.11

Correlation Coefficient

Eastwood Bio  Western Investment

Average diversification

The 3 months correlation between Eastwood and Western is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Western Investment go up and down completely randomly.

Pair Corralation between Eastwood Bio and Western Investment

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to under-perform the Western Investment. In addition to that, Eastwood Bio is 3.52 times more volatile than Western Investment. It trades about -0.06 of its total potential returns per unit of risk. Western Investment is currently generating about -0.01 per unit of volatility. If you would invest  57.00  in Western Investment on December 30, 2024 and sell it today you would lose (2.00) from holding Western Investment or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Western Investment

Eastwood Bio Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastwood Bio Medical Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Western Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eastwood Bio and Western Investment

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

The idea behind Eastwood Bio Medical Canada and Western Investment 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.