Correlation Between WSP Global and Bilfinger
Can any of the company-specific risk be diversified away by investing in both WSP Global and Bilfinger 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 WSP Global and Bilfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Bilfinger SE ADR, you can compare the effects of market volatilities on WSP Global and Bilfinger 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 WSP Global with a short position of Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Bilfinger.
Diversification Opportunities for WSP Global and Bilfinger
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WSP and Bilfinger is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Bilfinger SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE ADR and WSP Global 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 WSP Global are associated (or correlated) with Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE ADR has no effect on the direction of WSP Global i.e., WSP Global and Bilfinger go up and down completely randomly.
Pair Corralation between WSP Global and Bilfinger
Assuming the 90 days horizon WSP Global is expected to generate 1.51 times less return on investment than Bilfinger. But when comparing it to its historical volatility, WSP Global is 2.17 times less risky than Bilfinger. It trades about 0.08 of its potential returns per unit of risk. Bilfinger SE ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 599.00 in Bilfinger SE ADR on August 29, 2024 and sell it today you would earn a total of 343.00 from holding Bilfinger SE ADR or generate 57.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.87% |
| Values | Daily Returns |
WSP Global vs. Bilfinger SE ADR
Performance |
| Timeline |
| WSP Global |
| Bilfinger SE ADR |
WSP Global and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Bilfinger
The main advantage of trading using opposite WSP Global and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.| WSP Global vs. Element Solutions | WSP Global vs. Orion Engineered Carbons | WSP Global vs. Minerals Technologies | WSP Global vs. Ingevity Corp |
| Bilfinger vs. Aecom Technology | Bilfinger vs. Matrix Service Co | Bilfinger vs. MYR Group | Bilfinger vs. Fluor |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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