Correlation Between West Island and CLS Holdings

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

By analyzing existing cross correlation between West Island Brands and CLS Holdings USA, you can compare the effects of market volatilities on West Island and CLS Holdings 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 Island with a short position of CLS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Island and CLS Holdings.

Diversification Opportunities for West Island and CLS Holdings

0.0

Correlation Coefficient

West Island  CLS Holdings

Pay attention - limited upside

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

Pair Corralation between West Island and CLS Holdings

Assuming the 90 days horizon West Island Brands is expected to generate 7.77 times more return on investment than CLS Holdings. However, West Island is 7.77 times more volatile than CLS Holdings USA. It trades about 0.09 of its potential returns per unit of risk. CLS Holdings USA is currently generating about 0.05 per unit of risk. If you would invest  9.00  in West Island Brands on September 3, 2024 and sell it today you would lose (8.65) from holding West Island Brands or give up 96.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

West Island Brands  vs.  CLS Holdings USA

West Island Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Island Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, West Island is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CLS Holdings USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with West Island and CLS Holdings

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

The idea behind West Island Brands and CLS Holdings USA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.