Correlation Between George Weston and Highwood Asset

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

By analyzing existing cross correlation between George Weston 475 and Highwood Asset Management, you can compare the effects of market volatilities on George Weston and Highwood Asset 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 Highwood Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Highwood Asset.

Diversification Opportunities for George Weston and Highwood Asset

-0.24

Correlation Coefficient

George Weston  Highwood Asset

Very good diversification

The 3 months correlation between George and Highwood is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding George Weston 475 and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management 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 475 are associated (or correlated) with Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of George Weston i.e., George Weston and Highwood Asset go up and down completely randomly.

Pair Corralation between George Weston and Highwood Asset

Assuming the 90 days trading horizon George Weston is expected to generate 17.3 times less return on investment than Highwood Asset. But when comparing it to its historical volatility, George Weston 475 is 3.82 times less risky than Highwood Asset. It trades about 0.01 of its potential returns per unit of risk. Highwood Asset Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  590.00  in Highwood Asset Management on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Highwood Asset Management or generate 2.03% return on investment over 90 days.

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

George Weston 475  vs.  Highwood Asset Management

George Weston 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days George Weston 475 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Highwood Asset Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with George Weston and Highwood Asset

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

The idea behind George Weston 475 and Highwood Asset Management 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.