Correlation Between Westport Fuel and Gogoro Equity

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

By analyzing existing cross correlation between Westport Fuel Systems and Gogoro Equity Warrant, you can compare the effects of market volatilities on Westport Fuel and Gogoro Equity 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 Westport Fuel with a short position of Gogoro Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Gogoro Equity.

Diversification Opportunities for Westport Fuel and Gogoro Equity

0.5

Correlation Coefficient

Westport Fuel  Gogoro Equity

Very weak diversification

The 3 months correlation between Westport and Gogoro is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Gogoro Equity Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogoro Equity Warrant and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with Gogoro Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogoro Equity Warrant has no effect on the direction of Westport Fuel i.e., Westport Fuel and Gogoro Equity go up and down completely randomly.

Pair Corralation between Westport Fuel and Gogoro Equity

Given the investment horizon of 90 days Westport Fuel is expected to generate 17.32 times less return on investment than Gogoro Equity. But when comparing it to its historical volatility, Westport Fuel Systems is 5.53 times less risky than Gogoro Equity. It trades about 0.04 of its potential returns per unit of risk. Gogoro Equity Warrant is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.97  in Gogoro Equity Warrant on December 30, 2024 and sell it today you would earn a total of  0.60  from holding Gogoro Equity Warrant or generate 30.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.71%
Values	Daily Returns

Westport Fuel Systems  vs.  Gogoro Equity Warrant

Westport Fuel Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westport Fuel Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westport Fuel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gogoro Equity Warrant

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gogoro Equity Warrant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gogoro Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westport Fuel and Gogoro Equity

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

The idea behind Westport Fuel Systems and Gogoro Equity Warrant 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.