Correlation Between Universal Security and WESCO International
Can any of the company-specific risk be diversified away by investing in both Universal Security 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 Universal Security and WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Security Instruments and WESCO International, you can compare the effects of market volatilities on Universal Security 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 Universal Security with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Security and WESCO International.
Diversification Opportunities for Universal Security and WESCO International
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Universal and WESCO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Universal Security Instruments and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Universal Security 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 Universal Security Instruments 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 Universal Security i.e., Universal Security and WESCO International go up and down completely randomly.
Pair Corralation between Universal Security and WESCO International
Considering the 90-day investment horizon Universal Security Instruments is expected to generate 3.12 times more return on investment than WESCO International. However, Universal Security is 3.12 times more volatile than WESCO International. It trades about 0.22 of its potential returns per unit of risk. WESCO International is currently generating about 0.24 per unit of risk. If you would invest 141.00 in Universal Security Instruments on August 27, 2024 and sell it today you would earn a total of 73.00 from holding Universal Security Instruments or generate 51.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Security Instruments vs. WESCO International
Performance |
| Timeline |
| Universal Security |
| WESCO International |
Universal Security and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Security and WESCO International
The main advantage of trading using opposite Universal Security and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Security 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.| Universal Security vs. Brinks Company | Universal Security vs. MSA Safety | Universal Security vs. Resideo Technologies | Universal Security vs. Mistras Group |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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