Correlation Between Transportadora and Wayside Technology

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

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

Diversification Opportunities for Transportadora and Wayside Technology

0.91

Correlation Coefficient

Transportadora  Wayside Technology

Almost no diversification

The 3 months correlation between Transportadora and Wayside is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology and Transportadora 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 Transportadora de Gas are associated (or correlated) with Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of Transportadora i.e., Transportadora and Wayside Technology go up and down completely randomly.

Pair Corralation between Transportadora and Wayside Technology

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.15 times more return on investment than Wayside Technology. However, Transportadora is 1.15 times more volatile than Wayside Technology Group. It trades about 0.21 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.21 per unit of risk. If you would invest  1,710  in Transportadora de Gas on August 31, 2024 and sell it today you would earn a total of  1,010  from holding Transportadora de Gas or generate 59.06% return on investment over 90 days.

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

Transportadora de Gas  vs.  Wayside Technology Group

Transportadora de Gas

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

Wayside Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 16 (%) 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.

Pair Trading with Transportadora and Wayside Technology

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

The idea behind Transportadora de Gas and Wayside Technology 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 Global Correlations module to find global opportunities by holding instruments from different markets.