Correlation Between WESTERN DESERT and WESTERN REFINING

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

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

Diversification Opportunities for WESTERN DESERT and WESTERN REFINING

0.0

Correlation Coefficient

WESTERN DESERT  WESTERN REFINING

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 DESERT and WESTERN REFINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN REFINING and WESTERN DESERT 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 DESERT are associated (or correlated) with WESTERN REFINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN REFINING has no effect on the direction of WESTERN DESERT i.e., WESTERN DESERT and WESTERN REFINING go up and down completely randomly.

Pair Corralation between WESTERN DESERT and WESTERN REFINING

If you would invest (100.00) in WESTERN REFINING on October 23, 2024 and sell it today you would earn a total of  100.00  from holding WESTERN REFINING or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WESTERN DESERT  vs.  WESTERN REFINING

WESTERN DESERT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN DESERT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, WESTERN DESERT is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

WESTERN REFINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN REFINING has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, WESTERN REFINING is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WESTERN DESERT and WESTERN REFINING

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

The idea behind WESTERN DESERT and WESTERN REFINING 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.