Correlation Between 22966RAH9 and Westrock Coffee

Can any of the company-specific risk be diversified away by investing in both 22966RAH9 and Westrock Coffee 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 22966RAH9 and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CUBE 225 15 DEC 28 and Westrock Coffee, you can compare the effects of market volatilities on 22966RAH9 and Westrock Coffee 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 22966RAH9 with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22966RAH9 and Westrock Coffee.

Diversification Opportunities for 22966RAH9 and Westrock Coffee

-0.26

Correlation Coefficient

22966RAH9  Westrock Coffee

Very good diversification

The 3 months correlation between 22966RAH9 and Westrock is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CUBE 225 15 DEC 28 and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and 22966RAH9 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 CUBE 225 15 DEC 28 are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of 22966RAH9 i.e., 22966RAH9 and Westrock Coffee go up and down completely randomly.

Pair Corralation between 22966RAH9 and Westrock Coffee

Assuming the 90 days trading horizon CUBE 225 15 DEC 28 is expected to generate 0.27 times more return on investment than Westrock Coffee. However, CUBE 225 15 DEC 28 is 3.69 times less risky than Westrock Coffee. It trades about 0.03 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.03 per unit of risk. If you would invest  8,381  in CUBE 225 15 DEC 28 on September 12, 2024 and sell it today you would earn a total of  401.00  from holding CUBE 225 15 DEC 28 or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.57%
Values	Daily Returns

CUBE 225 15 DEC 28  vs.  Westrock Coffee

CUBE 225 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CUBE 225 15 DEC 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 22966RAH9 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Westrock Coffee

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 22966RAH9 and Westrock Coffee

The main advantage of trading using opposite 22966RAH9 and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22966RAH9 position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.

The idea behind CUBE 225 15 DEC 28 and Westrock Coffee 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.