Correlation Between Celsius Holdings and Western Sierra

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

By analyzing existing cross correlation between Celsius Holdings and Western Sierra Mining, you can compare the effects of market volatilities on Celsius Holdings and Western Sierra 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 Celsius Holdings with a short position of Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celsius Holdings and Western Sierra.

Diversification Opportunities for Celsius Holdings and Western Sierra

0.56

Correlation Coefficient

Celsius Holdings  Western Sierra

Very weak diversification

The 3 months correlation between Celsius and Western is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining and Celsius Holdings 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 Celsius Holdings are associated (or correlated) with Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Western Sierra go up and down completely randomly.

Pair Corralation between Celsius Holdings and Western Sierra

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Western Sierra. In addition to that, Celsius Holdings is 3.19 times more volatile than Western Sierra Mining. It trades about -0.08 of its total potential returns per unit of risk. Western Sierra Mining is currently generating about -0.17 per unit of volatility. If you would invest  0.78  in Western Sierra Mining on September 3, 2024 and sell it today you would lose (0.10) from holding Western Sierra Mining or give up 12.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Celsius Holdings  vs.  Western Sierra Mining

Celsius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celsius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Western Sierra Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Sierra Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Celsius Holdings and Western Sierra

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

The idea behind Celsius Holdings and Western Sierra Mining 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.