Correlation Between Wolters Kluwer and National Stock

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

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

Diversification Opportunities for Wolters Kluwer and National Stock

-0.01

Correlation Coefficient

Wolters Kluwer  National Stock

Good diversification

The 3 months correlation between Wolters and National is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and National Stock Yards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Stock Yards 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 NV are associated (or correlated) with National Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Stock Yards has no effect on the direction of Wolters Kluwer i.e., Wolters Kluwer and National Stock go up and down completely randomly.

Pair Corralation between Wolters Kluwer and National Stock

Assuming the 90 days horizon Wolters Kluwer NV is expected to generate 0.43 times more return on investment than National Stock. However, Wolters Kluwer NV is 2.3 times less risky than National Stock. It trades about 0.08 of its potential returns per unit of risk. National Stock Yards is currently generating about 0.02 per unit of risk. If you would invest  10,596  in Wolters Kluwer NV on October 7, 2024 and sell it today you would earn a total of  5,772  from holding Wolters Kluwer NV or generate 54.47% return on investment over 90 days.

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

Wolters Kluwer NV  vs.  National Stock Yards

Wolters Kluwer NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

National Stock Yards

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Stock Yards are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, National Stock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wolters Kluwer and National Stock

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

The idea behind Wolters Kluwer NV and National Stock Yards 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.