Correlation Between Global Partners and WESCO International
Can any of the company-specific risk be diversified away by investing in both Global Partners and WESCO International 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 Global Partners and WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Partners LP and WESCO International, you can compare the effects of market volatilities on Global Partners and WESCO International 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 Global Partners with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and WESCO International.
Diversification Opportunities for Global Partners and WESCO International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and WESCO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Global Partners 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 Global Partners LP are associated (or correlated) with WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Global Partners i.e., Global Partners and WESCO International go up and down completely randomly.
Pair Corralation between Global Partners and WESCO International
Assuming the 90 days trading horizon Global Partners is expected to generate 14.07 times less return on investment than WESCO International. But when comparing it to its historical volatility, Global Partners LP is 13.07 times less risky than WESCO International. It trades about 0.23 of its potential returns per unit of risk. WESCO International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 17,944 in WESCO International on August 27, 2024 and sell it today you would earn a total of 3,375 from holding WESCO International or generate 18.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Partners LP vs. WESCO International
Performance |
| Timeline |
| Global Partners LP |
| WESCO International |
Global Partners and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Partners and WESCO International
The main advantage of trading using opposite Global Partners and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Partners position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.| Global Partners vs. GasLog Partners LP | Global Partners vs. GasLog Partners LP | Global Partners vs. Aquagold International | Global Partners vs. Morningstar Unconstrained Allocation |
| WESCO International vs. DXP Enterprises | WESCO International vs. Applied Industrial Technologies | WESCO International vs. Ferguson Plc | WESCO International vs. Global Industrial Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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