Correlation Between WillScot Mobile and Vornado Realty

Can any of the company-specific risk be diversified away by investing in both WillScot Mobile and Vornado Realty 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 Vornado Realty 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 Vornado Realty Trust, you can compare the effects of market volatilities on WillScot Mobile and Vornado Realty 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 Vornado Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of WillScot Mobile and Vornado Realty.

Diversification Opportunities for WillScot Mobile and Vornado Realty

0.3

Correlation Coefficient

WillScot Mobile  Vornado Realty

Weak diversification

The 3 months correlation between WillScot and Vornado is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding WillScot Mobile Mini and Vornado Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vornado Realty Trust 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 Vornado Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vornado Realty Trust has no effect on the direction of WillScot Mobile i.e., WillScot Mobile and Vornado Realty go up and down completely randomly.

Pair Corralation between WillScot Mobile and Vornado Realty

Assuming the 90 days trading horizon WillScot Mobile Mini is expected to under-perform the Vornado Realty. In addition to that, WillScot Mobile is 1.02 times more volatile than Vornado Realty Trust. It trades about -0.26 of its total potential returns per unit of risk. Vornado Realty Trust is currently generating about -0.03 per unit of volatility. If you would invest  4,112  in Vornado Realty Trust on September 27, 2024 and sell it today you would lose (86.00) from holding Vornado Realty Trust or give up 2.09% of portfolio value over 90 days.

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

WillScot Mobile Mini  vs.  Vornado Realty Trust

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vornado Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vornado Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vornado Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WillScot Mobile and Vornado Realty

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

The idea behind WillScot Mobile Mini and Vornado Realty Trust 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.