Correlation Between WOLTERS KLUWER and Wolters Kluwer

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

By analyzing existing cross correlation between WOLTERS KLUWER ADR and Wolters Kluwer NV, you can compare the effects of market volatilities on WOLTERS KLUWER and Wolters Kluwer 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 Wolters Kluwer. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOLTERS KLUWER and Wolters Kluwer.

Diversification Opportunities for WOLTERS KLUWER and Wolters Kluwer

0.97

Correlation Coefficient

WOLTERS KLUWER  Wolters Kluwer

Almost no diversification

The 3 months correlation between WOLTERS and Wolters is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding WOLTERS KLUWER ADR and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV 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 ADR are associated (or correlated) with Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of WOLTERS KLUWER i.e., WOLTERS KLUWER and Wolters Kluwer go up and down completely randomly.

Pair Corralation between WOLTERS KLUWER and Wolters Kluwer

Assuming the 90 days horizon WOLTERS KLUWER ADR is expected to generate 0.81 times more return on investment than Wolters Kluwer. However, WOLTERS KLUWER ADR is 1.24 times less risky than Wolters Kluwer. It trades about -0.36 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about -0.31 per unit of risk. If you would invest  17,700  in WOLTERS KLUWER ADR on December 4, 2024 and sell it today you would lose (2,800) from holding WOLTERS KLUWER ADR or give up 15.82% of portfolio value over 90 days.

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

WOLTERS KLUWER ADR  vs.  Wolters Kluwer NV

WOLTERS KLUWER ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days WOLTERS KLUWER ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with WOLTERS KLUWER and Wolters Kluwer

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

The idea behind WOLTERS KLUWER ADR and Wolters Kluwer NV 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.