Correlation Between Vertiv Holdings and Westward Gold

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

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

Diversification Opportunities for Vertiv Holdings and Westward Gold

0.75

Correlation Coefficient

Vertiv Holdings  Westward Gold

Poor diversification

The 3 months correlation between Vertiv and Westward is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and Westward Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westward Gold and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with Westward Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westward Gold has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and Westward Gold go up and down completely randomly.

Pair Corralation between Vertiv Holdings and Westward Gold

Considering the 90-day investment horizon Vertiv Holdings is expected to generate 1.06 times less return on investment than Westward Gold. But when comparing it to its historical volatility, Vertiv Holdings Co is 3.45 times less risky than Westward Gold. It trades about 0.27 of its potential returns per unit of risk. Westward Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.39  in Westward Gold on August 31, 2024 and sell it today you would earn a total of  1.00  from holding Westward Gold or generate 22.78% return on investment over 90 days.

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

Vertiv Holdings Co  vs.  Westward Gold

Vertiv Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertiv Holdings Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vertiv Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Westward Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westward Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Westward Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertiv Holdings and Westward Gold

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

The idea behind Vertiv Holdings Co and Westward Gold 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.