Correlation Between WSP Global and Skanska AB
Can any of the company-specific risk be diversified away by investing in both WSP Global and Skanska AB 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 Skanska AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Skanska AB ser, you can compare the effects of market volatilities on WSP Global and Skanska AB 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 Skanska AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Skanska AB.
Diversification Opportunities for WSP Global and Skanska AB
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WSP and Skanska is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of WSP Global i.e., WSP Global and Skanska AB go up and down completely randomly.
Pair Corralation between WSP Global and Skanska AB
Assuming the 90 days horizon WSP Global is expected to generate 0.79 times more return on investment than Skanska AB. However, WSP Global is 1.27 times less risky than Skanska AB. It trades about -0.07 of its potential returns per unit of risk. Skanska AB ser is currently generating about -0.1 per unit of risk. If you would invest 17,908 in WSP Global on August 28, 2024 and sell it today you would lose (352.00) from holding WSP Global or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. Skanska AB ser
Performance |
| Timeline |
| WSP Global |
| Skanska AB ser |
WSP Global and Skanska AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Skanska AB
The main advantage of trading using opposite WSP Global and Skanska AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global position performs unexpectedly, Skanska AB 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 Skanska AB will offset losses from the drop in Skanska AB's long position.| WSP Global vs. Element Solutions | WSP Global vs. Orion Engineered Carbons | WSP Global vs. Minerals Technologies | WSP Global vs. Ingevity Corp |
| Skanska AB vs. Aecom Technology | Skanska AB vs. Matrix Service Co | Skanska AB vs. MYR Group | Skanska AB 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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