Correlation Between Wolters Kluwer and Relx PLC

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

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

Diversification Opportunities for Wolters Kluwer and Relx PLC

0.72

Correlation Coefficient

Wolters Kluwer  Relx PLC

Poor diversification

The 3 months correlation between Wolters and Relx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and Relx PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC and Wolters Kluwer 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 Wolters Kluwer NV are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC has no effect on the direction of Wolters Kluwer i.e., Wolters Kluwer and Relx PLC go up and down completely randomly.

Pair Corralation between Wolters Kluwer and Relx PLC

Assuming the 90 days trading horizon Wolters Kluwer NV is expected to under-perform the Relx PLC. In addition to that, Wolters Kluwer is 1.62 times more volatile than Relx PLC. It trades about -0.08 of its total potential returns per unit of risk. Relx PLC is currently generating about 0.1 per unit of volatility. If you would invest  4,344  in Relx PLC on December 30, 2024 and sell it today you would earn a total of  296.00  from holding Relx PLC or generate 6.81% return on investment over 90 days.

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

Wolters Kluwer NV  vs.  Relx PLC

Wolters Kluwer NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Relx PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Relx PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Relx PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wolters Kluwer and Relx PLC

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

The idea behind Wolters Kluwer NV and Relx 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.