Correlation Between QUEEN S and WESCO International

Can any of the company-specific risk be diversified away by investing in both QUEEN S and WESCO International 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 QUEEN S and WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QUEEN S ROAD and WESCO International, you can compare the effects of market volatilities on QUEEN S and WESCO International 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 QUEEN S with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUEEN S and WESCO International.

Diversification Opportunities for QUEEN S and WESCO International

0.36

Correlation Coefficient

QUEEN S  WESCO International

Weak diversification

The 3 months correlation between QUEEN and WESCO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and QUEEN S 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 QUEEN S ROAD are associated (or correlated) with WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of QUEEN S i.e., QUEEN S and WESCO International go up and down completely randomly.

Pair Corralation between QUEEN S and WESCO International

Assuming the 90 days horizon QUEEN S is expected to generate 1.02 times less return on investment than WESCO International. In addition to that, QUEEN S is 1.41 times more volatile than WESCO International. It trades about 0.02 of its total potential returns per unit of risk. WESCO International is currently generating about 0.03 per unit of volatility. If you would invest  13,909  in WESCO International on September 28, 2024 and sell it today you would earn a total of  3,191  from holding WESCO International or generate 22.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

QUEEN S ROAD  vs.  WESCO International

QUEEN S ROAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QUEEN S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WESCO International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WESCO International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QUEEN S and WESCO International

The main advantage of trading using opposite QUEEN S and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUEEN S position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.

The idea behind QUEEN S ROAD and WESCO International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.