Correlation Between GMO Internet and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Wayside Technology 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 GMO Internet and Wayside Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Wayside Technology Group, you can compare the effects of market volatilities on GMO Internet and Wayside Technology 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 GMO Internet with a short position of Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Wayside Technology.
Diversification Opportunities for GMO Internet and Wayside Technology
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMO and Wayside is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology and GMO Internet 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 GMO Internet are associated (or correlated) with Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of GMO Internet i.e., GMO Internet and Wayside Technology go up and down completely randomly.
Pair Corralation between GMO Internet and Wayside Technology
Assuming the 90 days horizon GMO Internet is expected to generate 4.95 times less return on investment than Wayside Technology. But when comparing it to its historical volatility, GMO Internet is 1.55 times less risky than Wayside Technology. It trades about 0.06 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 12,000 in Wayside Technology Group on October 29, 2024 and sell it today you would earn a total of 800.00 from holding Wayside Technology Group or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Wayside Technology Group
Performance |
| Timeline |
| GMO Internet |
| Wayside Technology |
GMO Internet and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Wayside Technology
The main advantage of trading using opposite GMO Internet and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Wayside Technology 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 Wayside Technology will offset losses from the drop in Wayside Technology's long position.| GMO Internet vs. Yuexiu Transport Infrastructure | GMO Internet vs. BROADWIND ENRGY | GMO Internet vs. Hanison Construction Holdings | GMO Internet vs. Gold Road Resources |
| Wayside Technology vs. Sekisui Chemical Co | Wayside Technology vs. Sanyo Chemical Industries | Wayside Technology vs. Southwest Airlines Co | Wayside Technology vs. Nok Airlines PCL |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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