Correlation Between WESANA HEALTH and Penske Automotive

Can any of the company-specific risk be diversified away by investing in both WESANA HEALTH and Penske Automotive 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 WESANA HEALTH and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESANA HEALTH HOLD and Penske Automotive Group, you can compare the effects of market volatilities on WESANA HEALTH and Penske Automotive 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 WESANA HEALTH with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESANA HEALTH and Penske Automotive.

Diversification Opportunities for WESANA HEALTH and Penske Automotive

0.24

Correlation Coefficient

WESANA HEALTH  Penske Automotive

Modest diversification

The 3 months correlation between WESANA and Penske is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding WESANA HEALTH HOLD and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and WESANA HEALTH 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 WESANA HEALTH HOLD are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of WESANA HEALTH i.e., WESANA HEALTH and Penske Automotive go up and down completely randomly.

Pair Corralation between WESANA HEALTH and Penske Automotive

If you would invest  0.15  in WESANA HEALTH HOLD on October 9, 2024 and sell it today you would earn a total of  0.00  from holding WESANA HEALTH HOLD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

WESANA HEALTH HOLD  vs.  Penske Automotive Group

WESANA HEALTH HOLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESANA HEALTH HOLD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WESANA HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Penske Automotive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penske Automotive Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penske Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WESANA HEALTH and Penske Automotive

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

The idea behind WESANA HEALTH HOLD and Penske Automotive Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.