Correlation Between Wilhelmina and Target Hospitality

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

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

Diversification Opportunities for Wilhelmina and Target Hospitality

0.39

Correlation Coefficient

Wilhelmina  Target Hospitality

Weak diversification

The 3 months correlation between Wilhelmina and Target is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp and Wilhelmina 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 Wilhelmina are associated (or correlated) with Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of Wilhelmina i.e., Wilhelmina and Target Hospitality go up and down completely randomly.

Pair Corralation between Wilhelmina and Target Hospitality

Given the investment horizon of 90 days Wilhelmina is expected to under-perform the Target Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Wilhelmina is 1.27 times less risky than Target Hospitality. The stock trades about -0.11 of its potential returns per unit of risk. The Target Hospitality Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  968.00  in Target Hospitality Corp on September 18, 2024 and sell it today you would lose (14.00) from holding Target Hospitality Corp or give up 1.45% of portfolio value over 90 days.

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

Wilhelmina  vs.  Target Hospitality Corp

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Target Hospitality Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Target Hospitality is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wilhelmina and Target Hospitality

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

The idea behind Wilhelmina and Target Hospitality Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.