Correlation Between Willdan and Resources Connection

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

By analyzing existing cross correlation between Willdan Group and Resources Connection, you can compare the effects of market volatilities on Willdan and Resources Connection 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 Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willdan and Resources Connection.

Diversification Opportunities for Willdan and Resources Connection

-0.77

Correlation Coefficient

Willdan  Resources Connection

Pay attention - limited upside

The 3 months correlation between Willdan and Resources is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection 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 Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of Willdan i.e., Willdan and Resources Connection go up and down completely randomly.

Pair Corralation between Willdan and Resources Connection

Given the investment horizon of 90 days Willdan Group is expected to generate 0.92 times more return on investment than Resources Connection. However, Willdan Group is 1.09 times less risky than Resources Connection. It trades about 0.11 of its potential returns per unit of risk. Resources Connection is currently generating about -0.06 per unit of risk. If you would invest  3,748  in Willdan Group on September 12, 2024 and sell it today you would earn a total of  539.00  from holding Willdan Group or generate 14.38% return on investment over 90 days.

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

Willdan Group  vs.  Resources Connection

Willdan Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

Resources Connection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Willdan and Resources Connection

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

The idea behind Willdan Group and Resources Connection 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.