Correlation Between Willscot Mobile and United Fire

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

Diversification Opportunities for Willscot Mobile and United Fire

-0.8

Correlation Coefficient

Willscot Mobile  United Fire

Pay attention - limited upside

The 3 months correlation between Willscot and United is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group 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 United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Willscot Mobile i.e., Willscot Mobile and United Fire go up and down completely randomly.

Pair Corralation between Willscot Mobile and United Fire

Considering the 90-day investment horizon Willscot Mobile Mini is expected to under-perform the United Fire. In addition to that, Willscot Mobile is 1.36 times more volatile than United Fire Group. It trades about -0.07 of its total potential returns per unit of risk. United Fire Group is currently generating about 0.05 per unit of volatility. If you would invest  2,821  in United Fire Group on December 28, 2024 and sell it today you would earn a total of  151.00  from holding United Fire Group or generate 5.35% return on investment over 90 days.

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

Willscot Mobile Mini  vs.  United Fire Group

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.

United Fire Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Willscot Mobile and United Fire

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

The idea behind Willscot Mobile Mini and United Fire Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.