Correlation Between Udemy and WesBanco

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

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

Diversification Opportunities for Udemy and WesBanco

0.08

Correlation Coefficient

Udemy  WesBanco

Significant diversification

The 3 months correlation between Udemy and WesBanco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Udemy Inc and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco and Udemy 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 Udemy Inc are associated (or correlated) with WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Udemy i.e., Udemy and WesBanco go up and down completely randomly.

Pair Corralation between Udemy and WesBanco

Given the investment horizon of 90 days Udemy Inc is expected to generate 9.16 times more return on investment than WesBanco. However, Udemy is 9.16 times more volatile than WesBanco. It trades about 0.03 of its potential returns per unit of risk. WesBanco is currently generating about 0.09 per unit of risk. If you would invest  820.00  in Udemy Inc on October 23, 2024 and sell it today you would earn a total of  25.00  from holding Udemy Inc or generate 3.05% return on investment over 90 days.

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

Udemy Inc  vs.  WesBanco

Udemy Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Udemy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

WesBanco

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Udemy and WesBanco

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

The idea behind Udemy Inc and WesBanco 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 Commodity Directory module to find actively traded commodities issued by global exchanges.