Correlation Between Western Acquisition and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and HE Equipment 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 Acquisition and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and HE Equipment Services, you can compare the effects of market volatilities on Western Acquisition and HE Equipment 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 Acquisition with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and HE Equipment.
Diversification Opportunities for Western Acquisition and HE Equipment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and HEES is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and Western Acquisition 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 Acquisition Ventures are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Western Acquisition i.e., Western Acquisition and HE Equipment go up and down completely randomly.
Pair Corralation between Western Acquisition and HE Equipment
Given the investment horizon of 90 days Western Acquisition is expected to generate 3.33 times less return on investment than HE Equipment. But when comparing it to its historical volatility, Western Acquisition Ventures is 1.62 times less risky than HE Equipment. It trades about 0.01 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,331 in HE Equipment Services on September 24, 2024 and sell it today you would earn a total of 548.00 from holding HE Equipment Services or generate 12.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Western Acquisition Ventures vs. HE Equipment Services
Performance |
Timeline |
Western Acquisition |
HE Equipment Services |
Western Acquisition and HE Equipment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Acquisition and HE Equipment
The main advantage of trading using opposite Western Acquisition and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.Western Acquisition vs. Aquagold International | Western Acquisition vs. Morningstar Unconstrained Allocation | Western Acquisition vs. Thrivent High Yield | Western Acquisition vs. Via Renewables |
HE Equipment vs. PROG Holdings | HE Equipment vs. McGrath RentCorp | HE Equipment vs. GATX Corporation | HE Equipment vs. Alta Equipment Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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