Correlation Between Western Acquisition and FREEPORT

Can any of the company-specific risk be diversified away by investing in both Western Acquisition and FREEPORT 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 FREEPORT 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 FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on Western Acquisition and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and FREEPORT.

Diversification Opportunities for Western Acquisition and FREEPORT

-0.18

Correlation Coefficient

Western Acquisition  FREEPORT

Good diversification

The 3 months correlation between Western and FREEPORT is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of Western Acquisition i.e., Western Acquisition and FREEPORT go up and down completely randomly.

Pair Corralation between Western Acquisition and FREEPORT

Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the FREEPORT. In addition to that, Western Acquisition is 2.09 times more volatile than FREEPORT MCMORAN INC 525. It trades about -0.3 of its total potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about -0.09 per unit of volatility. If you would invest  10,039  in FREEPORT MCMORAN INC 525 on September 21, 2024 and sell it today you would lose (89.00) from holding FREEPORT MCMORAN INC 525 or give up 0.89% of portfolio value over 90 days.

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

Western Acquisition Ventures  vs.  FREEPORT MCMORAN INC 525

Western Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 2 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Acquisition and FREEPORT

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

The idea behind Western Acquisition Ventures and FREEPORT MCMORAN INC 525 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..