Correlation Between Westrock Coffee and Vector

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

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

Diversification Opportunities for Westrock Coffee and Vector

-0.06

Correlation Coefficient

Westrock Coffee  Vector

Good diversification

The 3 months correlation between Westrock and Vector is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Vector Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vector Group and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with Vector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vector Group has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and Vector go up and down completely randomly.

Pair Corralation between Westrock Coffee and Vector

Given the investment horizon of 90 days Westrock Coffee is expected to generate 1.27 times more return on investment than Vector. However, Westrock Coffee is 1.27 times more volatile than Vector Group. It trades about 0.04 of its potential returns per unit of risk. Vector Group is currently generating about 0.03 per unit of risk. If you would invest  1,013  in Westrock Coffee on February 21, 2024 and sell it today you would earn a total of  46.00  from holding Westrock Coffee or generate 4.54% return on investment over 90 days.

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

Westrock Coffee  vs.  Vector Group

Westrock Coffee

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Vector Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vector Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Vector is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Westrock Coffee and Vector

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

The idea behind Westrock Coffee and Vector Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.