Correlation Between Western Acquisition and BaringtonHilco Acquisition

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

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

Diversification Opportunities for Western Acquisition and BaringtonHilco Acquisition

-0.57

Correlation Coefficient

Western Acquisition  BaringtonHilco Acquisition

Excellent diversification

The 3 months correlation between Western and BaringtonHilco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and BaringtonHilco Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaringtonHilco Acquisition and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with BaringtonHilco Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaringtonHilco Acquisition has no effect on the direction of Western Acquisition i.e., Western Acquisition and BaringtonHilco Acquisition go up and down completely randomly.

Pair Corralation between Western Acquisition and BaringtonHilco Acquisition

Assuming the 90 days horizon Western Acquisition Ventures is expected to generate 0.51 times more return on investment than BaringtonHilco Acquisition. However, Western Acquisition Ventures is 1.95 times less risky than BaringtonHilco Acquisition. It trades about 0.16 of its potential returns per unit of risk. BaringtonHilco Acquisition is currently generating about -0.03 per unit of risk. If you would invest  1,080  in Western Acquisition Ventures on September 17, 2024 and sell it today you would earn a total of  74.00  from holding Western Acquisition Ventures or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.92%
Values	Daily Returns

Western Acquisition Ventures  vs.  BaringtonHilco Acquisition

Western Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BaringtonHilco Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BaringtonHilco Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BaringtonHilco Acquisition is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Acquisition and BaringtonHilco Acquisition

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

The idea behind Western Acquisition Ventures and BaringtonHilco Acquisition 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.