Correlation Between H B and WD 40
Can any of the company-specific risk be diversified away by investing in both H B and WD 40 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 H B and WD 40 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H B Fuller and WD 40 Company, you can compare the effects of market volatilities on H B and WD 40 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 H B with a short position of WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and WD 40.
Diversification Opportunities for H B and WD 40
Excellent diversification
The 3 months correlation between FUL and WDFC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and WD 40 Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 Company and H B 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 H B Fuller are associated (or correlated) with WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 Company has no effect on the direction of H B i.e., H B and WD 40 go up and down completely randomly.
Pair Corralation between H B and WD 40
Considering the 90-day investment horizon H B Fuller is expected to under-perform the WD 40. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.32 times less risky than WD 40. The stock trades about -0.01 of its potential returns per unit of risk. The WD 40 Company is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 23,578 in WD 40 Company on August 25, 2024 and sell it today you would earn a total of 4,817 from holding WD 40 Company or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H B Fuller vs. WD 40 Company
Performance |
| Timeline |
| H B Fuller |
| WD 40 Company |
H B and WD 40 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H B and WD 40
The main advantage of trading using opposite H B and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.The idea behind H B Fuller and WD 40 Company 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |