Correlation Between WSP Global and Comfort Systems
Can any of the company-specific risk be diversified away by investing in both WSP Global and Comfort Systems 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 Comfort Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Comfort Systems USA, you can compare the effects of market volatilities on WSP Global and Comfort Systems 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 Comfort Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Comfort Systems.
Diversification Opportunities for WSP Global and Comfort Systems
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between WSP and Comfort is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Comfort Systems USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comfort Systems USA 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 Comfort Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comfort Systems USA has no effect on the direction of WSP Global i.e., WSP Global and Comfort Systems go up and down completely randomly.
Pair Corralation between WSP Global and Comfort Systems
Assuming the 90 days horizon WSP Global is expected to under-perform the Comfort Systems. But the pink sheet apears to be less risky and, when comparing its historical volatility, WSP Global is 3.37 times less risky than Comfort Systems. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Comfort Systems USA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 44,855 in Comfort Systems USA on November 4, 2024 and sell it today you would lose (1,180) from holding Comfort Systems USA or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. Comfort Systems USA
Performance |
| Timeline |
| WSP Global |
| Comfort Systems USA |
WSP Global and Comfort Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Comfort Systems
The main advantage of trading using opposite WSP Global and Comfort Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global position performs unexpectedly, Comfort Systems 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 Comfort Systems will offset losses from the drop in Comfort Systems' long position.| WSP Global vs. George Weston Limited | WSP Global vs. Intact Financial | WSP Global vs. Metro Inc | WSP Global vs. Kingspan Group PLC |
| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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