Correlation Between Woodbrook Group and First Tractor

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

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

Diversification Opportunities for Woodbrook Group and First Tractor

-0.11

Correlation Coefficient

Woodbrook Group  First Tractor

Good diversification

The 3 months correlation between Woodbrook and First is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Woodbrook Group Holdings and First Tractor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor and Woodbrook Group 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 Woodbrook Group Holdings are associated (or correlated) with First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of Woodbrook Group i.e., Woodbrook Group and First Tractor go up and down completely randomly.

Pair Corralation between Woodbrook Group and First Tractor

Given the investment horizon of 90 days Woodbrook Group Holdings is expected to generate 23.51 times more return on investment than First Tractor. However, Woodbrook Group is 23.51 times more volatile than First Tractor. It trades about 0.11 of its potential returns per unit of risk. First Tractor is currently generating about 0.13 per unit of risk. If you would invest  5.12  in Woodbrook Group Holdings on December 29, 2024 and sell it today you would earn a total of  0.88  from holding Woodbrook Group Holdings or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Woodbrook Group Holdings  vs.  First Tractor

Woodbrook Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodbrook Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Woodbrook Group reported solid returns over the last few months and may actually be approaching a breakup point.

First Tractor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Tractor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First Tractor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woodbrook Group and First Tractor

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

The idea behind Woodbrook Group Holdings and First Tractor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.