Correlation Between Western Midstream and NFT

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

By analyzing existing cross correlation between Western Midstream Partners and NFT Limited, you can compare the effects of market volatilities on Western Midstream and NFT 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 Midstream with a short position of NFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Midstream and NFT.

Diversification Opportunities for Western Midstream and NFT

-0.51

Correlation Coefficient

Western Midstream  NFT

Excellent diversification

The 3 months correlation between Western and NFT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Midstream Partners and NFT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Limited and Western Midstream 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 Midstream Partners are associated (or correlated) with NFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Limited has no effect on the direction of Western Midstream i.e., Western Midstream and NFT go up and down completely randomly.

Pair Corralation between Western Midstream and NFT

Considering the 90-day investment horizon Western Midstream is expected to generate 1.69 times less return on investment than NFT. But when comparing it to its historical volatility, Western Midstream Partners is 5.84 times less risky than NFT. It trades about 0.11 of its potential returns per unit of risk. NFT Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  743.00  in NFT Limited on September 15, 2024 and sell it today you would lose (313.00) from holding NFT Limited or give up 42.13% of portfolio value over 90 days.

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

Western Midstream Partners  vs.  NFT Limited

Western Midstream

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Western Midstream is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

NFT Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, NFT is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Midstream and NFT

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

The idea behind Western Midstream Partners and NFT Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.