Correlation Between Western Capital and Table Trac

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

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

Diversification Opportunities for Western Capital and Table Trac

0.18

Correlation Coefficient

Western Capital  Table Trac

Average diversification

The 3 months correlation between Western and Table is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Capital Resources and Table Trac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Table Trac and Western Capital 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 Capital Resources are associated (or correlated) with Table Trac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Table Trac has no effect on the direction of Western Capital i.e., Western Capital and Table Trac go up and down completely randomly.

Pair Corralation between Western Capital and Table Trac

Given the investment horizon of 90 days Western Capital Resources is expected to generate 1.13 times more return on investment than Table Trac. However, Western Capital is 1.13 times more volatile than Table Trac. It trades about 0.09 of its potential returns per unit of risk. Table Trac is currently generating about 0.03 per unit of risk. If you would invest  766.00  in Western Capital Resources on September 17, 2024 and sell it today you would earn a total of  131.00  from holding Western Capital Resources or generate 17.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Western Capital Resources  vs.  Table Trac

Western Capital Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Capital Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Western Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Table Trac

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Table Trac are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Table Trac is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Capital and Table Trac

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

The idea behind Western Capital Resources and Table Trac 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.