Correlation Between Metro and WSP Global
Can any of the company-specific risk be diversified away by investing in both Metro and WSP Global 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 Metro and WSP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Inc and WSP Global, you can compare the effects of market volatilities on Metro and WSP Global 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 Metro with a short position of WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro and WSP Global.
Diversification Opportunities for Metro and WSP Global
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metro and WSP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global and Metro 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 Metro Inc are associated (or correlated) with WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Metro i.e., Metro and WSP Global go up and down completely randomly.
Pair Corralation between Metro and WSP Global
Assuming the 90 days horizon Metro Inc is expected to generate 1.0 times more return on investment than WSP Global. However, Metro is 1.0 times more volatile than WSP Global. It trades about 0.39 of its potential returns per unit of risk. WSP Global is currently generating about -0.1 per unit of risk. If you would invest 5,882 in Metro Inc on August 30, 2024 and sell it today you would earn a total of 609.00 from holding Metro Inc or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Metro Inc vs. WSP Global
Performance |
| Timeline |
| Metro Inc |
| WSP Global |
Metro and WSP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro and WSP Global
The main advantage of trading using opposite Metro and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.| Metro vs. Natural Grocers by | Metro vs. Sprouts Farmers Market | Metro vs. Albertsons Companies | Metro vs. Kroger Company |
| WSP Global vs. Deere Company | WSP Global vs. Columbus McKinnon | WSP Global vs. Hyster Yale Materials Handling | WSP Global vs. Manitowoc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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