Correlation Between Peloton Minerals and West Red

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

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

Diversification Opportunities for Peloton Minerals and West Red

0.42

Correlation Coefficient

Peloton Minerals  West Red

Very weak diversification

The 3 months correlation between Peloton and West is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Minerals and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake and Peloton Minerals 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 Peloton Minerals are associated (or correlated) with West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of Peloton Minerals i.e., Peloton Minerals and West Red go up and down completely randomly.

Pair Corralation between Peloton Minerals and West Red

Assuming the 90 days horizon Peloton Minerals is expected to under-perform the West Red. In addition to that, Peloton Minerals is 2.22 times more volatile than West Red Lake. It trades about -0.04 of its total potential returns per unit of risk. West Red Lake is currently generating about 0.05 per unit of volatility. If you would invest  40.00  in West Red Lake on October 7, 2024 and sell it today you would earn a total of  1.00  from holding West Red Lake or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Peloton Minerals  vs.  West Red Lake

Peloton Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peloton Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Peloton Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

West Red Lake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Red Lake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Peloton Minerals and West Red

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

The idea behind Peloton Minerals and West Red Lake 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.