Correlation Between Willscot Mobile and Talen Energy

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

Diversification Opportunities for Willscot Mobile and Talen Energy

0.78

Correlation Coefficient

Willscot Mobile  Talen Energy

Poor diversification

The 3 months correlation between Willscot and Talen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen Energy 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 Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of Willscot Mobile i.e., Willscot Mobile and Talen Energy go up and down completely randomly.

Pair Corralation between Willscot Mobile and Talen Energy

Considering the 90-day investment horizon Willscot Mobile Mini is expected to under-perform the Talen Energy. But the stock apears to be less risky and, when comparing its historical volatility, Willscot Mobile Mini is 1.82 times less risky than Talen Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Talen Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20,166  in Talen Energy on December 28, 2024 and sell it today you would earn a total of  143.00  from holding Talen Energy or generate 0.71% return on investment over 90 days.

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

Willscot Mobile Mini  vs.  Talen Energy

Willscot Mobile Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willscot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Talen Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talen Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Talen Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Willscot Mobile and Talen Energy

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

The idea behind Willscot Mobile Mini and Talen Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.