Correlation Between SmartStop Self and Westbridge Energy

Can any of the company-specific risk be diversified away by investing in both SmartStop Self and Westbridge Energy 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 SmartStop Self and Westbridge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SmartStop Self Storage and Westbridge Energy, you can compare the effects of market volatilities on SmartStop Self and Westbridge Energy 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 SmartStop Self with a short position of Westbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartStop Self and Westbridge Energy.

Diversification Opportunities for SmartStop Self and Westbridge Energy

-0.39

Correlation Coefficient

SmartStop Self  Westbridge Energy

Very good diversification

The 3 months correlation between SmartStop and Westbridge is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage and Westbridge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westbridge Energy and SmartStop Self 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 SmartStop Self Storage are associated (or correlated) with Westbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westbridge Energy has no effect on the direction of SmartStop Self i.e., SmartStop Self and Westbridge Energy go up and down completely randomly.

Pair Corralation between SmartStop Self and Westbridge Energy

Assuming the 90 days horizon SmartStop Self Storage is expected to under-perform the Westbridge Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, SmartStop Self Storage is 2.3 times less risky than Westbridge Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Westbridge Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Westbridge Energy on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Westbridge Energy or generate 0.0% return on investment over 90 days.

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

SmartStop Self Storage  vs.  Westbridge Energy

SmartStop Self Storage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Westbridge Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SmartStop Self and Westbridge Energy

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

The idea behind SmartStop Self Storage and Westbridge Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.