Correlation Between Charter Communications and WD 40

Can any of the company-specific risk be diversified away by investing in both Charter Communications and WD 40 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 Charter Communications and WD 40 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications and WD 40 CO, you can compare the effects of market volatilities on Charter Communications and WD 40 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 Charter Communications with a short position of WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and WD 40.

Diversification Opportunities for Charter Communications and WD 40

0.93

Correlation Coefficient

Charter Communications  WD 40

Almost no diversification

The 3 months correlation between Charter and WD1 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and WD 40 CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 CO and Charter Communications 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 Charter Communications are associated (or correlated) with WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 CO has no effect on the direction of Charter Communications i.e., Charter Communications and WD 40 go up and down completely randomly.

Pair Corralation between Charter Communications and WD 40

Assuming the 90 days horizon Charter Communications is expected to under-perform the WD 40. In addition to that, Charter Communications is 2.51 times more volatile than WD 40 CO. It trades about -0.18 of its total potential returns per unit of risk. WD 40 CO is currently generating about -0.42 per unit of volatility. If you would invest  27,000  in WD 40 CO on September 23, 2024 and sell it today you would lose (2,200) from holding WD 40 CO or give up 8.15% of portfolio value over 90 days.

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

Charter Communications  vs.  WD 40 CO

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

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

WD 40 CO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WD 40 CO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WD 40 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Charter Communications and WD 40

The main advantage of trading using opposite Charter Communications and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.

The idea behind Charter Communications and WD 40 CO 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.