Correlation Between Man Group and Westrock Coffee

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

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

Diversification Opportunities for Man Group and Westrock Coffee

0.0

Correlation Coefficient

Man Group  Westrock Coffee

Pay attention - limited upside

The 3 months correlation between Man and Westrock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Man Group plc and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Man Group 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 Man Group plc 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 Man Group i.e., Man Group and Westrock Coffee go up and down completely randomly.

Pair Corralation between Man Group and Westrock Coffee

If you would invest  230.00  in Westrock Coffee on February 27, 2024 and sell it today you would earn a total of  10.00  from holding Westrock Coffee or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Man Group plc  vs.  Westrock Coffee

Man Group plc

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Man Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Man Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Westrock Coffee

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Westrock Coffee showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Man Group and Westrock Coffee

The main advantage of trading using opposite Man Group and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Man Group 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 Man Group plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.