Correlation Between Global Ship and WESCO International
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Ship 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 Ship Lease and WESCO International, you can compare the effects of market volatilities on Global Ship 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 Ship with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and WESCO International.
Diversification Opportunities for Global Ship and WESCO International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and WESCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Global Ship 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 Ship Lease 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 Ship i.e., Global Ship and WESCO International go up and down completely randomly.
Pair Corralation between Global Ship and WESCO International
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 4.68 times more return on investment than WESCO International. However, Global Ship is 4.68 times more volatile than WESCO International. It trades about 0.05 of its potential returns per unit of risk. WESCO International is currently generating about 0.13 per unit of risk. If you would invest 2,325 in Global Ship Lease on August 24, 2024 and sell it today you would earn a total of 285.00 from holding Global Ship Lease or generate 12.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. WESCO International
Performance |
| Timeline |
| Global Ship Lease |
| WESCO International |
Global Ship and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and WESCO International
The main advantage of trading using opposite Global Ship and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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