Correlation Between WESCO International and SiteOne Landscape
Can any of the company-specific risk be diversified away by investing in both WESCO International and SiteOne Landscape 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 SiteOne Landscape into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and SiteOne Landscape Supply, you can compare the effects of market volatilities on WESCO International and SiteOne Landscape 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 SiteOne Landscape. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and SiteOne Landscape.
Diversification Opportunities for WESCO International and SiteOne Landscape
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESCO and SiteOne is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and SiteOne Landscape Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiteOne Landscape Supply 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 SiteOne Landscape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiteOne Landscape Supply has no effect on the direction of WESCO International i.e., WESCO International and SiteOne Landscape go up and down completely randomly.
Pair Corralation between WESCO International and SiteOne Landscape
Assuming the 90 days trading horizon WESCO International is expected to generate 0.08 times more return on investment than SiteOne Landscape. However, WESCO International is 12.27 times less risky than SiteOne Landscape. It trades about 0.14 of its potential returns per unit of risk. SiteOne Landscape Supply is currently generating about -0.01 per unit of risk. If you would invest 2,540 in WESCO International on November 2, 2024 and sell it today you would earn a total of 34.00 from holding WESCO International or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESCO International vs. SiteOne Landscape Supply
Performance |
| Timeline |
| WESCO International |
| SiteOne Landscape Supply |
WESCO International and SiteOne Landscape Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and SiteOne Landscape
The main advantage of trading using opposite WESCO International and SiteOne Landscape positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International position performs unexpectedly, SiteOne Landscape 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 SiteOne Landscape will offset losses from the drop in SiteOne Landscape's long position.| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
| SiteOne Landscape vs. DXP Enterprises | SiteOne Landscape vs. Applied Industrial Technologies | SiteOne Landscape vs. Ferguson Plc | SiteOne Landscape 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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