Correlation Between Western Acquisition and Mountain I

Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Mountain I 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 Mountain I 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 Mountain I Acquisition, you can compare the effects of market volatilities on Western Acquisition and Mountain I 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 Mountain I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Mountain I.

Diversification Opportunities for Western Acquisition and Mountain I

-0.75

Correlation Coefficient

Western Acquisition  Mountain I

Pay attention - limited upside

The 3 months correlation between Western and Mountain is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Mountain I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain I 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 Mountain I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain I Acquisition has no effect on the direction of Western Acquisition i.e., Western Acquisition and Mountain I go up and down completely randomly.

Pair Corralation between Western Acquisition and Mountain I

Assuming the 90 days horizon Western Acquisition Ventures is expected to generate 400.59 times more return on investment than Mountain I. However, Western Acquisition is 400.59 times more volatile than Mountain I Acquisition. It trades about 0.06 of its potential returns per unit of risk. Mountain I Acquisition is currently generating about 0.16 per unit of risk. If you would invest  2.18  in Western Acquisition Ventures on September 18, 2024 and sell it today you would lose (0.31) from holding Western Acquisition Ventures or give up 14.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	37.5%
Values	Daily Returns

Western Acquisition Ventures  vs.  Mountain I Acquisition

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Western Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Mountain I Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Mountain I Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mountain I is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Acquisition and Mountain I

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

The idea behind Western Acquisition Ventures and Mountain I 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.