Correlation Between Workspace Group and Big Yellow
Can any of the company-specific risk be diversified away by investing in both Workspace Group and Big Yellow 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 Workspace Group and Big Yellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workspace Group PLC and Big Yellow Group, you can compare the effects of market volatilities on Workspace Group and Big Yellow 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 Workspace Group with a short position of Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workspace Group and Big Yellow.
Diversification Opportunities for Workspace Group and Big Yellow
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Workspace and Big is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and Workspace Group 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 Workspace Group PLC are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of Workspace Group i.e., Workspace Group and Big Yellow go up and down completely randomly.
Pair Corralation between Workspace Group and Big Yellow
Assuming the 90 days trading horizon Workspace Group PLC is expected to generate 1.07 times more return on investment than Big Yellow. However, Workspace Group is 1.07 times more volatile than Big Yellow Group. It trades about -0.17 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.24 per unit of risk. If you would invest 61,200 in Workspace Group PLC on August 30, 2024 and sell it today you would lose (5,000) from holding Workspace Group PLC or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workspace Group PLC vs. Big Yellow Group
Performance |
| Timeline |
| Workspace Group PLC |
| Big Yellow Group |
Workspace Group and Big Yellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workspace Group and Big Yellow
The main advantage of trading using opposite Workspace Group and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workspace Group position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.| Workspace Group vs. Derwent London PLC | Workspace Group vs. Hammerson PLC | Workspace Group vs. Supermarket Income REIT | Workspace Group vs. Cairo Communication SpA |
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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 Stocks Directory module to find actively traded stocks across global markets.
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