Correlation Between Western Acquisition and SEP Acquisition

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

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

Diversification Opportunities for Western Acquisition and SEP Acquisition

0.5

Correlation Coefficient

Western Acquisition  SEP Acquisition

Very weak diversification

The 3 months correlation between Western and SEP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition Corp and Western Acquisition 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 Acquisition Ventures are associated (or correlated) with SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of Western Acquisition i.e., Western Acquisition and SEP Acquisition go up and down completely randomly.

Pair Corralation between Western Acquisition and SEP Acquisition

Given the investment horizon of 90 days Western Acquisition is expected to generate 23.92 times less return on investment than SEP Acquisition. But when comparing it to its historical volatility, Western Acquisition Ventures is 33.24 times less risky than SEP Acquisition. It trades about 0.3 of its potential returns per unit of risk. SEP Acquisition Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  963.00  in SEP Acquisition Corp on January 29, 2024 and sell it today you would earn a total of  388.00  from holding SEP Acquisition Corp or generate 40.29% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  SEP Acquisition Corp

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SEP Acquisition Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEP Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SEP Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Acquisition and SEP Acquisition

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

The idea behind Western Acquisition Ventures and SEP Acquisition Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.