Correlation Between Advanced Drainage and WESCO International

Can any of the company-specific risk be diversified away by investing in both Advanced Drainage and WESCO International 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 Advanced Drainage and WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Drainage Systems and WESCO International, you can compare the effects of market volatilities on Advanced Drainage and WESCO International 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 Advanced Drainage with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Drainage and WESCO International.

Diversification Opportunities for Advanced Drainage and WESCO International

0.33

Correlation Coefficient

Advanced Drainage  WESCO International

Weak diversification

The 3 months correlation between Advanced and WESCO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Drainage Systems and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Advanced Drainage 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 Advanced Drainage Systems are associated (or correlated) with WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Advanced Drainage i.e., Advanced Drainage and WESCO International go up and down completely randomly.

Pair Corralation between Advanced Drainage and WESCO International

Considering the 90-day investment horizon Advanced Drainage is expected to generate 4.32 times less return on investment than WESCO International. But when comparing it to its historical volatility, Advanced Drainage Systems is 1.07 times less risky than WESCO International. It trades about 0.02 of its potential returns per unit of risk. WESCO International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  22,602  in WESCO International on August 26, 2025 and sell it today you would earn a total of  2,851  from holding WESCO International or generate 12.61% return on investment over 90 days.

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

Advanced Drainage Systems  vs.  WESCO International

Advanced Drainage Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Advanced Drainage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WESCO International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WESCO International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, WESCO International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Drainage and WESCO International

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

The idea behind Advanced Drainage Systems and WESCO International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.