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One of the popular trading techniques among algorithmic traders is to use market-neutral strategies where every trade hedges away some risk. Because there are two separate transactions required, even if one position performs unexpectedly, the other equity can make up some of the losses. Below are some of the equities that can be combined with WATSCO INC stock to make a market-neutral strategy. Peer analysis of WATSCO INC could also be used in its relative valuation, which is a method of valuing WATSCO INC by comparing valuation metrics with similar companies.

The danger of trading WATSCO INC is mainly related to its market volatility and Company specific events. As an investor, you must understand the concept of risk-adjusted return before you start trading. The most common way to measure the risk of WATSCO INC is by using the Sharpe ratio. The ratio expresses how much excess return you acquire for the extra volatility you endure for holding a more risker asset than WATSCO INC. The Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. To understand how volatile WATSCO INC is, you must compare it to a benchmark. Traditionally, the risk-free rate of return is the rate of return on the shortest-dated U.S. Treasury, such as a 3-year bond.

Check out Your Current Watchlist to better understand how to build diversified portfolios. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in board of governors. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

When running WATSCO INC's price analysis, check to measure WATSCO INC's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy WATSCO INC is operating at the current time. Most of WATSCO INC's value examination focuses on studying past and present price action to predict the probability of WATSCO INC's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move WATSCO INC's price. Additionally, you may evaluate how the addition of WATSCO INC to your portfolios can decrease your overall portfolio volatility.