Correlation Between WESCO International and Core Main
Can any of the company-specific risk be diversified away by investing in both WESCO International and Core Main 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 WESCO International and Core Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and Core Main, you can compare the effects of market volatilities on WESCO International and Core Main 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 WESCO International with a short position of Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and Core Main.
Diversification Opportunities for WESCO International and Core Main
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WESCO and Core is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main and WESCO International 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 WESCO International are associated (or correlated) with Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of WESCO International i.e., WESCO International and Core Main go up and down completely randomly.
Pair Corralation between WESCO International and Core Main
Assuming the 90 days trading horizon WESCO International is expected to generate 21.71 times less return on investment than Core Main. But when comparing it to its historical volatility, WESCO International is 17.48 times less risky than Core Main. It trades about 0.14 of its potential returns per unit of risk. Core Main is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,358 in Core Main on November 2, 2024 and sell it today you would earn a total of 1,345 from holding Core Main or generate 30.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESCO International vs. Core Main
Performance |
| Timeline |
| WESCO International |
| Core Main |
WESCO International and Core Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and Core Main
The main advantage of trading using opposite WESCO International and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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