Correlation Between Willdan and Resources Connection
Can any of the company-specific risk be diversified away by investing in both Willdan and Resources Connection 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 Willdan and Resources Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willdan Group and Resources Connection, you can compare the effects of market volatilities on Willdan and Resources Connection 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 Willdan with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willdan and Resources Connection.
Diversification Opportunities for Willdan and Resources Connection
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Willdan and Resources is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and Willdan 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 Willdan Group are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of Willdan i.e., Willdan and Resources Connection go up and down completely randomly.
Pair Corralation between Willdan and Resources Connection
Given the investment horizon of 90 days Willdan Group is expected to under-perform the Resources Connection. In addition to that, Willdan is 1.45 times more volatile than Resources Connection. It trades about -0.21 of its total potential returns per unit of risk. Resources Connection is currently generating about -0.02 per unit of volatility. If you would invest 879.00 in Resources Connection on September 12, 2024 and sell it today you would lose (4.00) from holding Resources Connection or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willdan Group vs. Resources Connection
Performance |
| Timeline |
| Willdan Group |
| Resources Connection |
Willdan and Resources Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willdan and Resources Connection
The main advantage of trading using opposite Willdan and Resources Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willdan position performs unexpectedly, Resources Connection 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 Resources Connection will offset losses from the drop in Resources Connection's long position.| Willdan vs. WSP Global | Willdan vs. Comfort Systems USA | Willdan vs. MYR Group | Willdan vs. Matrix Service Co |
| Resources Connection vs. CRA International | Resources Connection vs. Huron Consulting Group | Resources Connection vs. Forrester Research | Resources Connection vs. Exponent |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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