Correlation Between WESCO International and Transcat
Can any of the company-specific risk be diversified away by investing in both WESCO International and Transcat 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 Transcat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and Transcat, you can compare the effects of market volatilities on WESCO International and Transcat 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 Transcat. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and Transcat.
Diversification Opportunities for WESCO International and Transcat
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WESCO and Transcat is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and Transcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcat 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 Transcat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcat has no effect on the direction of WESCO International i.e., WESCO International and Transcat go up and down completely randomly.
Pair Corralation between WESCO International and Transcat
Assuming the 90 days trading horizon WESCO International is expected to generate 1.23 times less return on investment than Transcat. But when comparing it to its historical volatility, WESCO International is 8.98 times less risky than Transcat. It trades about 0.09 of its potential returns per unit of risk. Transcat is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8,400 in Transcat on November 28, 2024 and sell it today you would lose (57.00) from holding Transcat or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
WESCO International vs. Transcat
Performance |
| Timeline |
| WESCO International |
| Transcat |
WESCO International and Transcat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and Transcat
The main advantage of trading using opposite WESCO International and Transcat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International position performs unexpectedly, Transcat 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 Transcat will offset losses from the drop in Transcat's long position.| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
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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