Correlation Between National Western and Acumen Pharmaceuticals

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

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

Diversification Opportunities for National Western and Acumen Pharmaceuticals

-0.07

Correlation Coefficient

National Western  Acumen Pharmaceuticals

Good diversification

The 3 months correlation between National and Acumen is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Western Life and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and National Western 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 National Western Life are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of National Western i.e., National Western and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between National Western and Acumen Pharmaceuticals

Given the investment horizon of 90 days National Western is expected to generate 103.03 times less return on investment than Acumen Pharmaceuticals. But when comparing it to its historical volatility, National Western Life is 15.61 times less risky than Acumen Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  313.00  in Acumen Pharmaceuticals on February 21, 2024 and sell it today you would earn a total of  52.00  from holding Acumen Pharmaceuticals or generate 16.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

National Western Life  vs.  Acumen Pharmaceuticals

National Western Life

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Western Life are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, National Western is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Acumen Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with National Western and Acumen Pharmaceuticals

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

The idea behind National Western Life and Acumen Pharmaceuticals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.