Correlation Between Galway Metals and Westhaven Ventures

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

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

Diversification Opportunities for Galway Metals and Westhaven Ventures

-0.03

Correlation Coefficient

Galway Metals  Westhaven Ventures

Good diversification

The 3 months correlation between Galway and Westhaven is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Galway Metals and Westhaven Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westhaven Ventures and Galway Metals 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 Galway Metals are associated (or correlated) with Westhaven Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westhaven Ventures has no effect on the direction of Galway Metals i.e., Galway Metals and Westhaven Ventures go up and down completely randomly.

Pair Corralation between Galway Metals and Westhaven Ventures

Assuming the 90 days horizon Galway Metals is expected to under-perform the Westhaven Ventures. But the stock apears to be less risky and, when comparing its historical volatility, Galway Metals is 1.3 times less risky than Westhaven Ventures. The stock trades about -0.04 of its potential returns per unit of risk. The Westhaven Ventures is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Westhaven Ventures on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Westhaven Ventures or generate 27.27% return on investment over 90 days.

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

Galway Metals  vs.  Westhaven Ventures

Galway Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galway Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Westhaven Ventures

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westhaven Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Westhaven Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galway Metals and Westhaven Ventures

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

The idea behind Galway Metals and Westhaven Ventures 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.