Correlation Between Wendel and Clasquin

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

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

Diversification Opportunities for Wendel and Clasquin

0.65

Correlation Coefficient

Wendel  Clasquin

Poor diversification

The 3 months correlation between Wendel and Clasquin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Clasquin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clasquin and Wendel 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 Wendel are associated (or correlated) with Clasquin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clasquin has no effect on the direction of Wendel i.e., Wendel and Clasquin go up and down completely randomly.

Pair Corralation between Wendel and Clasquin

Assuming the 90 days horizon Wendel is expected to generate 3.78 times more return on investment than Clasquin. However, Wendel is 3.78 times more volatile than Clasquin. It trades about 0.07 of its potential returns per unit of risk. Clasquin is currently generating about 0.14 per unit of risk. If you would invest  9,030  in Wendel on September 3, 2024 and sell it today you would earn a total of  365.00  from holding Wendel or generate 4.04% return on investment over 90 days.

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

Wendel  vs.  Clasquin

Wendel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wendel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wendel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clasquin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clasquin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Clasquin is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wendel and Clasquin

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

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