Correlation Between Willdan and Lucas GC

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

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

Diversification Opportunities for Willdan and Lucas GC

0.24

Correlation Coefficient

Willdan  Lucas GC

Modest diversification

The 3 months correlation between Willdan and Lucas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and Lucas GC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucas GC Limited and Willdan 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 Willdan Group are associated (or correlated) with Lucas GC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucas GC Limited has no effect on the direction of Willdan i.e., Willdan and Lucas GC go up and down completely randomly.

Pair Corralation between Willdan and Lucas GC

Given the investment horizon of 90 days Willdan Group is expected to generate 0.62 times more return on investment than Lucas GC. However, Willdan Group is 1.61 times less risky than Lucas GC. It trades about 0.04 of its potential returns per unit of risk. Lucas GC Limited is currently generating about -0.04 per unit of risk. If you would invest  3,836  in Willdan Group on December 28, 2024 and sell it today you would earn a total of  261.00  from holding Willdan Group or generate 6.8% return on investment over 90 days.

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

Willdan Group  vs.  Lucas GC Limited

Willdan Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lucas GC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucas GC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Willdan and Lucas GC

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

The idea behind Willdan Group and Lucas GC Limited 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.