Correlation Between George Weston and North West

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

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

Diversification Opportunities for George Weston and North West

-0.1

Correlation Coefficient

George Weston  North West

Good diversification

The 3 months correlation between George and North is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Prf and North West in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North West and George Weston 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 George Weston Prf are associated (or correlated) with North West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North West has no effect on the direction of George Weston i.e., George Weston and North West go up and down completely randomly.

Pair Corralation between George Weston and North West

Assuming the 90 days trading horizon George Weston Prf is expected to under-perform the North West. But the preferred stock apears to be less risky and, when comparing its historical volatility, George Weston Prf is 2.97 times less risky than North West. The preferred stock trades about -0.04 of its potential returns per unit of risk. The North West is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,532  in North West on September 2, 2024 and sell it today you would earn a total of  623.00  from holding North West or generate 13.75% return on investment over 90 days.

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

George Weston Prf  vs.  North West

George Weston Prf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days George Weston Prf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, George Weston is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

North West

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in North West are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, North West displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with George Weston and North West

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

The idea behind George Weston Prf and North West 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.