Correlation Between Sixt Leasing and WATSCO INC
Can any of the company-specific risk be diversified away by investing in both Sixt Leasing and WATSCO INC 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 Sixt Leasing and WATSCO INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixt Leasing SE and WATSCO INC B, you can compare the effects of market volatilities on Sixt Leasing and WATSCO INC 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 Sixt Leasing with a short position of WATSCO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt Leasing and WATSCO INC.
Diversification Opportunities for Sixt Leasing and WATSCO INC
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sixt and WATSCO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sixt Leasing SE and WATSCO INC B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WATSCO INC B and Sixt Leasing 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 Sixt Leasing SE are associated (or correlated) with WATSCO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WATSCO INC B has no effect on the direction of Sixt Leasing i.e., Sixt Leasing and WATSCO INC go up and down completely randomly.
Pair Corralation between Sixt Leasing and WATSCO INC
Assuming the 90 days trading horizon Sixt Leasing SE is expected to under-perform the WATSCO INC. But the stock apears to be less risky and, when comparing its historical volatility, Sixt Leasing SE is 1.09 times less risky than WATSCO INC. The stock trades about -0.09 of its potential returns per unit of risk. The WATSCO INC B is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 41,142 in WATSCO INC B on October 20, 2024 and sell it today you would earn a total of 1,988 from holding WATSCO INC B or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixt Leasing SE vs. WATSCO INC B
Performance |
| Timeline |
| Sixt Leasing SE |
| WATSCO INC B |
Sixt Leasing and WATSCO INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixt Leasing and WATSCO INC
The main advantage of trading using opposite Sixt Leasing and WATSCO INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt Leasing position performs unexpectedly, WATSCO INC 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 WATSCO INC will offset losses from the drop in WATSCO INC's long position.| Sixt Leasing vs. Richardson Electronics | Sixt Leasing vs. TT Electronics PLC | Sixt Leasing vs. Tyson Foods | Sixt Leasing vs. Nucletron Electronic Aktiengesellschaft |
| WATSCO INC vs. RATIONAL Aktiengesellschaft | WATSCO INC vs. Fastenal Company | WATSCO INC vs. Watsco Inc | WATSCO INC vs. RATIONAL UNADR 1 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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