Correlation Between Acme United and Willdan
Can any of the company-specific risk be diversified away by investing in both Acme United and Willdan 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 Acme United and Willdan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Willdan Group, you can compare the effects of market volatilities on Acme United and Willdan 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 Acme United with a short position of Willdan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Willdan.
Diversification Opportunities for Acme United and Willdan
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acme and Willdan is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group and Acme United 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 Acme United are associated (or correlated) with Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Acme United i.e., Acme United and Willdan go up and down completely randomly.
Pair Corralation between Acme United and Willdan
Considering the 90-day investment horizon Acme United is expected to generate 1.31 times less return on investment than Willdan. In addition to that, Acme United is 1.04 times more volatile than Willdan Group. It trades about 0.08 of its total potential returns per unit of risk. Willdan Group is currently generating about 0.12 per unit of volatility. If you would invest 3,200 in Willdan Group on September 1, 2024 and sell it today you would earn a total of 1,171 from holding Willdan Group or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Willdan Group
Performance |
| Timeline |
| Acme United |
| Willdan Group |
Acme United and Willdan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Willdan
The main advantage of trading using opposite Acme United and Willdan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Willdan 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 Willdan will offset losses from the drop in Willdan's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Willdan vs. SNC Lavalin Group | Willdan vs. WSP Global | Willdan vs. Comfort Systems USA | Willdan vs. MYR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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