Correlation Between West Canyon and Imperial Res

Can any of the company-specific risk be diversified away by investing in both West Canyon and Imperial Res 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 West Canyon and Imperial Res into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between West Canyon Energy and Imperial Res, you can compare the effects of market volatilities on West Canyon and Imperial Res 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 West Canyon with a short position of Imperial Res. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Canyon and Imperial Res.

Diversification Opportunities for West Canyon and Imperial Res

0.0

Correlation Coefficient

West Canyon  Imperial Res

Pay attention - limited upside

The 3 months correlation between West and Imperial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding West Canyon Energy and Imperial Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Res and West Canyon 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 West Canyon Energy are associated (or correlated) with Imperial Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Res has no effect on the direction of West Canyon i.e., West Canyon and Imperial Res go up and down completely randomly.

Pair Corralation between West Canyon and Imperial Res

If you would invest  0.05  in Imperial Res on September 26, 2024 and sell it today you would lose (0.03) from holding Imperial Res or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	84.24%
Values	Daily Returns

West Canyon Energy  vs.  Imperial Res

West Canyon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Canyon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, West Canyon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Imperial Res

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Res are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Imperial Res exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with West Canyon and Imperial Res

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

The idea behind West Canyon Energy and Imperial Res 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.