Correlation Between Western Acquisition and U1566PAD7

Can any of the company-specific risk be diversified away by investing in both Western Acquisition and U1566PAD7 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 U1566PAD7 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 LUMN 45 15 JAN 29, you can compare the effects of market volatilities on Western Acquisition and U1566PAD7 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 U1566PAD7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and U1566PAD7.

Diversification Opportunities for Western Acquisition and U1566PAD7

0.29

Correlation Coefficient

Western Acquisition  U1566PAD7

Modest diversification

The 3 months correlation between Western and U1566PAD7 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and LUMN 45 15 JAN 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMN 45 15 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 U1566PAD7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMN 45 15 has no effect on the direction of Western Acquisition i.e., Western Acquisition and U1566PAD7 go up and down completely randomly.

Pair Corralation between Western Acquisition and U1566PAD7

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.07 times more return on investment than U1566PAD7. However, Western Acquisition Ventures is 15.14 times less risky than U1566PAD7. It trades about -0.21 of its potential returns per unit of risk. LUMN 45 15 JAN 29 is currently generating about -0.46 per unit of risk. If you would invest  1,105  in Western Acquisition Ventures on September 26, 2024 and sell it today you would lose (30.00) from holding Western Acquisition Ventures or give up 2.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Western Acquisition Ventures  vs.  LUMN 45 15 JAN 29

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.

LUMN 45 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUMN 45 15 JAN 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LUMN 45 15 JAN 29 investors.

Pair Trading with Western Acquisition and U1566PAD7

The main advantage of trading using opposite Western Acquisition and U1566PAD7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, U1566PAD7 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 U1566PAD7 will offset losses from the drop in U1566PAD7's long position.

The idea behind Western Acquisition Ventures and LUMN 45 15 JAN 29 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.