Correlation Between WSP Global and VOLVO B

Can any of the company-specific risk be diversified away by investing in both WSP Global and VOLVO B 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 WSP Global and VOLVO B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WSP Global and VOLVO B UNSPADR, you can compare the effects of market volatilities on WSP Global and VOLVO B 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 WSP Global with a short position of VOLVO B. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and VOLVO B.

Diversification Opportunities for WSP Global and VOLVO B

0.35

Correlation Coefficient

WSP Global  VOLVO B

Weak diversification

The 3 months correlation between WSP and VOLVO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and VOLVO B UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLVO B UNSPADR and WSP Global 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 WSP Global are associated (or correlated) with VOLVO B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLVO B UNSPADR has no effect on the direction of WSP Global i.e., WSP Global and VOLVO B go up and down completely randomly.

Pair Corralation between WSP Global and VOLVO B

Assuming the 90 days horizon WSP Global is expected to generate 0.69 times more return on investment than VOLVO B. However, WSP Global is 1.45 times less risky than VOLVO B. It trades about 0.2 of its potential returns per unit of risk. VOLVO B UNSPADR is currently generating about 0.02 per unit of risk. If you would invest  15,179  in WSP Global on April 22, 2025 and sell it today you would earn a total of  2,721  from holding WSP Global or generate 17.93% return on investment over 90 days.

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

WSP Global  vs.  VOLVO B UNSPADR

WSP Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WSP Global reported solid returns over the last few months and may actually be approaching a breakup point.

VOLVO B UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, VOLVO B is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WSP Global and VOLVO B

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

The idea behind WSP Global and VOLVO B UNSPADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.