Correlation Between World Houseware and Trane Technologies

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

By analyzing existing cross correlation between World Houseware Limited and Trane Technologies plc, you can compare the effects of market volatilities on World Houseware and Trane Technologies 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 World Houseware with a short position of Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Houseware and Trane Technologies.

Diversification Opportunities for World Houseware and Trane Technologies

0.0

Correlation Coefficient

World Houseware  Trane Technologies

Pay attention - limited upside

The 3 months correlation between World and Trane is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding World Houseware Limited and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc and World Houseware 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 World Houseware Limited are associated (or correlated) with Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of World Houseware i.e., World Houseware and Trane Technologies go up and down completely randomly.

Pair Corralation between World Houseware and Trane Technologies

Assuming the 90 days horizon World Houseware Limited is expected to generate 2.91 times more return on investment than Trane Technologies. However, World Houseware is 2.91 times more volatile than Trane Technologies plc. It trades about 0.06 of its potential returns per unit of risk. Trane Technologies plc is currently generating about 0.06 per unit of risk. If you would invest  3.00  in World Houseware Limited on December 2, 2024 and sell it today you would earn a total of  2.00  from holding World Houseware Limited or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.02%
Values	Daily Returns

World Houseware Limited  vs.  Trane Technologies plc

World Houseware

Risk-Adjusted Performance

Very Weak

Over the last 90 days World Houseware Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, World Houseware is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Trane Technologies plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trane Technologies plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with World Houseware and Trane Technologies

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

The idea behind World Houseware Limited and Trane Technologies plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.