Correlation Between Western Acquisition and Perella Weinberg

Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Perella Weinberg 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 Perella Weinberg 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 Perella Weinberg Partners, you can compare the effects of market volatilities on Western Acquisition and Perella Weinberg 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 Perella Weinberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Perella Weinberg.

Diversification Opportunities for Western Acquisition and Perella Weinberg

-0.33

Correlation Coefficient

Western Acquisition  Perella Weinberg

Very good diversification

The 3 months correlation between Western and Perella is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Perella Weinberg Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perella Weinberg Partners 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 Perella Weinberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perella Weinberg Partners has no effect on the direction of Western Acquisition i.e., Western Acquisition and Perella Weinberg go up and down completely randomly.

Pair Corralation between Western Acquisition and Perella Weinberg

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.47 times more return on investment than Perella Weinberg. However, Western Acquisition Ventures is 2.14 times less risky than Perella Weinberg. It trades about 0.04 of its potential returns per unit of risk. Perella Weinberg Partners is currently generating about -0.17 per unit of risk. If you would invest  1,092  in Western Acquisition Ventures on October 9, 2024 and sell it today you would earn a total of  7.00  from holding Western Acquisition Ventures or generate 0.64% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Perella Weinberg Partners

Western Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Acquisition Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Perella Weinberg Partners

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Acquisition and Perella Weinberg

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

The idea behind Western Acquisition Ventures and Perella Weinberg Partners 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.