Correlation Between Westrock Coffee and Usio

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

By analyzing existing cross correlation between Westrock Coffee and Usio Inc, you can compare the effects of market volatilities on Westrock Coffee and Usio 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 Westrock Coffee with a short position of Usio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Usio.

Diversification Opportunities for Westrock Coffee and Usio

0.45

Correlation Coefficient

Westrock Coffee  Usio

Very weak diversification

The 3 months correlation between Westrock and Usio is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Usio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usio Inc and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with Usio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usio Inc has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Usio go up and down completely randomly.

Pair Corralation between Westrock Coffee and Usio

Given the investment horizon of 90 days Westrock Coffee is expected to generate 1.03 times more return on investment than Usio. However, Westrock Coffee is 1.03 times more volatile than Usio Inc. It trades about -0.02 of its potential returns per unit of risk. Usio Inc is currently generating about -0.02 per unit of risk. If you would invest  848.00  in Westrock Coffee on October 5, 2024 and sell it today you would lose (189.00) from holding Westrock Coffee or give up 22.29% of portfolio value over 90 days.

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

Westrock Coffee  vs.  Usio Inc

Westrock Coffee

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Usio Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usio Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Usio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Westrock Coffee and Usio

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

The idea behind Westrock Coffee and Usio Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.