Correlation Between WESTERN ENERGY and WESTERN AREAS

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

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

Diversification Opportunities for WESTERN ENERGY and WESTERN AREAS

0.0

Correlation Coefficient

WESTERN ENERGY  WESTERN AREAS

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

Pair Corralation between WESTERN ENERGY and WESTERN AREAS

If you would invest (100.00) in WESTERN AREAS on December 21, 2024 and sell it today you would earn a total of  100.00  from holding WESTERN AREAS or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WESTERN ENERGY SRV  vs.  WESTERN AREAS

WESTERN ENERGY SRV

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESTERN ENERGY SRV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WESTERN AREAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESTERN AREAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESTERN AREAS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WESTERN ENERGY and WESTERN AREAS

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

The idea behind WESTERN ENERGY SRV and WESTERN AREAS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.