Correlation Between Western Sierra and MOODYS

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

By analyzing existing cross correlation between Western Sierra Mining and MOODYS P 4875, you can compare the effects of market volatilities on Western Sierra and MOODYS 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 Sierra with a short position of MOODYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and MOODYS.

Diversification Opportunities for Western Sierra and MOODYS

0.82

Correlation Coefficient

Western Sierra  MOODYS

Very poor diversification

The 3 months correlation between Western and MOODYS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining and MOODYS P 4875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOODYS P 4875 and Western Sierra 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 Sierra Mining are associated (or correlated) with MOODYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOODYS P 4875 has no effect on the direction of Western Sierra i.e., Western Sierra and MOODYS go up and down completely randomly.

Pair Corralation between Western Sierra and MOODYS

Given the investment horizon of 90 days Western Sierra Mining is expected to under-perform the MOODYS. In addition to that, Western Sierra is 1.14 times more volatile than MOODYS P 4875. It trades about -0.17 of its total potential returns per unit of risk. MOODYS P 4875 is currently generating about -0.1 per unit of volatility. If you would invest  9,438  in MOODYS P 4875 on September 3, 2024 and sell it today you would lose (577.00) from holding MOODYS P 4875 or give up 6.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	83.08%
Values	Daily Returns

Western Sierra Mining  vs.  MOODYS P 4875

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 uncertain 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.

MOODYS P 4875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOODYS P 4875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MOODYS P 4875 investors.

Pair Trading with Western Sierra and MOODYS

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

The idea behind Western Sierra Mining and MOODYS P 4875 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.