Correlation Between Core Main and WESCO International

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

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

Diversification Opportunities for Core Main and WESCO International

0.1

Correlation Coefficient

Core Main  WESCO International

Average diversification

The 3 months correlation between Core and WESCO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Core Main 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 Core Main 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 Core Main i.e., Core Main and WESCO International go up and down completely randomly.

Pair Corralation between Core Main and WESCO International

Considering the 90-day investment horizon Core Main is expected to generate 18.14 times more return on investment than WESCO International. However, Core Main is 18.14 times more volatile than WESCO International. It trades about 0.09 of its potential returns per unit of risk. WESCO International is currently generating about 0.15 per unit of risk. If you would invest  4,507  in Core Main on August 30, 2024 and sell it today you would earn a total of  204.00  from holding Core Main or generate 4.53% return on investment over 90 days.

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

Core Main  vs.  WESCO International

Core Main

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Main has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Core Main is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

WESCO International

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, WESCO International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Main and WESCO International

The main advantage of trading using opposite Core Main and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main 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 Core Main 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.