Correlation Between WillScot Mobile and UPM Kymmene

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

By analyzing existing cross correlation between WillScot Mobile Mini and UPM Kymmene Oyj, you can compare the effects of market volatilities on WillScot Mobile and UPM Kymmene 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 WillScot Mobile with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of WillScot Mobile and UPM Kymmene.

Diversification Opportunities for WillScot Mobile and UPM Kymmene

-0.17

Correlation Coefficient

WillScot Mobile  UPM Kymmene

Good diversification

The 3 months correlation between WillScot and UPM is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding WillScot Mobile Mini and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj and WillScot Mobile 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 WillScot Mobile Mini are associated (or correlated) with UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of WillScot Mobile i.e., WillScot Mobile and UPM Kymmene go up and down completely randomly.

Pair Corralation between WillScot Mobile and UPM Kymmene

Assuming the 90 days trading horizon WillScot Mobile Mini is expected to under-perform the UPM Kymmene. In addition to that, WillScot Mobile is 2.22 times more volatile than UPM Kymmene Oyj. It trades about -0.01 of its total potential returns per unit of risk. UPM Kymmene Oyj is currently generating about 0.04 per unit of volatility. If you would invest  2,602  in UPM Kymmene Oyj on September 15, 2024 and sell it today you would earn a total of  26.00  from holding UPM Kymmene Oyj or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

WillScot Mobile Mini  vs.  UPM Kymmene Oyj

WillScot Mobile Mini

Risk-Adjusted Performance

0 of 100

Very Weak

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

UPM Kymmene Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UPM Kymmene Oyj 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 WillScot Mobile and UPM Kymmene

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

The idea behind WillScot Mobile Mini and UPM Kymmene Oyj 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.