Correlation Between Western Acquisition and Sable Offshore

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

Diversification Opportunities for Western Acquisition and Sable Offshore

-0.4

Correlation Coefficient

Western Acquisition  Sable Offshore

Very good diversification

The 3 months correlation between Western and Sable is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Western Acquisition i.e., Western Acquisition and Sable Offshore go up and down completely randomly.

Pair Corralation between Western Acquisition and Sable Offshore

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.11 times more return on investment than Sable Offshore. However, Western Acquisition Ventures is 8.92 times less risky than Sable Offshore. It trades about -0.12 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about -0.03 per unit of risk. If you would invest  1,092  in Western Acquisition Ventures on September 28, 2024 and sell it today you would lose (17.00) from holding Western Acquisition Ventures or give up 1.56% of portfolio value over 90 days.

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

Western Acquisition Ventures  vs.  Sable Offshore Corp

Western Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Acquisition and Sable Offshore

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

The idea behind Western Acquisition Ventures and Sable Offshore Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.