Correlation Between Arts Way and Woodbrook Group

Can any of the company-specific risk be diversified away by investing in both Arts Way and Woodbrook Group 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 Arts Way and Woodbrook Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arts Way Manufacturing Co and Woodbrook Group Holdings, you can compare the effects of market volatilities on Arts Way and Woodbrook Group 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 Arts Way with a short position of Woodbrook Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and Woodbrook Group.

Diversification Opportunities for Arts Way and Woodbrook Group

0.02

Correlation Coefficient

Arts Way  Woodbrook Group

Significant diversification

The 3 months correlation between Arts and Woodbrook is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Woodbrook Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodbrook Group Holdings and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with Woodbrook Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodbrook Group Holdings has no effect on the direction of Arts Way i.e., Arts Way and Woodbrook Group go up and down completely randomly.

Pair Corralation between Arts Way and Woodbrook Group

Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to under-perform the Woodbrook Group. But the stock apears to be less risky and, when comparing its historical volatility, Arts Way Manufacturing Co is 14.53 times less risky than Woodbrook Group. The stock trades about -0.18 of its potential returns per unit of risk. The Woodbrook Group Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.12  in Woodbrook Group Holdings on December 28, 2024 and sell it today you would earn a total of  0.88  from holding Woodbrook Group Holdings or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Arts Way Manufacturing Co  vs.  Woodbrook Group Holdings

Arts Way Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Woodbrook Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodbrook Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Woodbrook Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arts Way and Woodbrook Group

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

The idea behind Arts Way Manufacturing Co and Woodbrook Group Holdings 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.