Correlation Between WSP Global and Big Yellow
Can any of the company-specific risk be diversified away by investing in both WSP Global and Big Yellow 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 WSP Global and Big Yellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Big Yellow Group, you can compare the effects of market volatilities on WSP Global and Big Yellow 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 WSP Global with a short position of Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Big Yellow.
Diversification Opportunities for WSP Global and Big Yellow
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WSP and Big is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and WSP Global 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 WSP Global are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of WSP Global i.e., WSP Global and Big Yellow go up and down completely randomly.
Pair Corralation between WSP Global and Big Yellow
Assuming the 90 days horizon WSP Global is expected to generate 0.81 times more return on investment than Big Yellow. However, WSP Global is 1.24 times less risky than Big Yellow. It trades about 0.15 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.14 per unit of risk. If you would invest 14,864 in WSP Global on September 3, 2024 and sell it today you would earn a total of 1,636 from holding WSP Global or generate 11.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
WSP Global vs. Big Yellow Group
Performance |
Timeline |
WSP Global |
Big Yellow Group |
WSP Global and Big Yellow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WSP Global and Big Yellow
The main advantage of trading using opposite WSP Global and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.WSP Global vs. Larsen Toubro Limited | WSP Global vs. China Railway Group | WSP Global vs. China Communications Construction | WSP Global vs. Superior Plus Corp |
Big Yellow vs. Zoom Video Communications | Big Yellow vs. Choice Hotels International | Big Yellow vs. MELIA HOTELS | Big Yellow vs. NH HOTEL GROUP |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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