Correlation Between Wayside Technology and RTL GROUP

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

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

Diversification Opportunities for Wayside Technology and RTL GROUP

-0.89

Correlation Coefficient

Wayside Technology  RTL GROUP

Pay attention - limited upside

The 3 months correlation between Wayside and RTL is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and RTL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP and Wayside Technology 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 Wayside Technology Group are associated (or correlated) with RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP has no effect on the direction of Wayside Technology i.e., Wayside Technology and RTL GROUP go up and down completely randomly.

Pair Corralation between Wayside Technology and RTL GROUP

Assuming the 90 days horizon Wayside Technology Group is expected to under-perform the RTL GROUP. In addition to that, Wayside Technology is 3.42 times more volatile than RTL GROUP. It trades about -0.06 of its total potential returns per unit of risk. RTL GROUP is currently generating about 0.29 per unit of volatility. If you would invest  2,595  in RTL GROUP on October 9, 2024 and sell it today you would earn a total of  135.00  from holding RTL GROUP or generate 5.2% return on investment over 90 days.

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

Wayside Technology Group  vs.  RTL GROUP

Wayside Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

RTL GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Wayside Technology and RTL GROUP

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

The idea behind Wayside Technology Group and RTL 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.