Correlation Between WD 40 and Stora Enso
Can any of the company-specific risk be diversified away by investing in both WD 40 and Stora Enso 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 WD 40 and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WD 40 Company and Stora Enso Oyj, you can compare the effects of market volatilities on WD 40 and Stora Enso 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 WD 40 with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and Stora Enso.
Diversification Opportunities for WD 40 and Stora Enso
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WDFC and Stora is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and WD 40 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 WD 40 Company are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of WD 40 i.e., WD 40 and Stora Enso go up and down completely randomly.
Pair Corralation between WD 40 and Stora Enso
If you would invest 22,763 in WD 40 Company on August 25, 2024 and sell it today you would earn a total of 5,632 from holding WD 40 Company or generate 24.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
WD 40 Company vs. Stora Enso Oyj
Performance |
| Timeline |
| WD 40 Company |
| Stora Enso Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WD 40 and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WD 40 and Stora Enso
The main advantage of trading using opposite WD 40 and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.The idea behind WD 40 Company and Stora Enso Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Stora Enso vs. Nine Dragons Paper | Stora Enso vs. Canfor Pulp Products | Stora Enso vs. Mondi PLC ADR | Stora Enso vs. Clearwater Paper |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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