Correlation Between Iridium Communications and WillScot Mobile

Can any of the company-specific risk be diversified away by investing in both Iridium Communications and WillScot Mobile 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 Iridium Communications and WillScot Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iridium Communications and WillScot Mobile Mini, you can compare the effects of market volatilities on Iridium Communications and WillScot Mobile 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 Iridium Communications with a short position of WillScot Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and WillScot Mobile.

Diversification Opportunities for Iridium Communications and WillScot Mobile

0.17

Correlation Coefficient

Iridium Communications  WillScot Mobile

Average diversification

The 3 months correlation between Iridium and WillScot is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and WillScot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WillScot Mobile Mini and Iridium Communications 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 Iridium Communications are associated (or correlated) with WillScot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WillScot Mobile Mini has no effect on the direction of Iridium Communications i.e., Iridium Communications and WillScot Mobile go up and down completely randomly.

Pair Corralation between Iridium Communications and WillScot Mobile

Assuming the 90 days horizon Iridium Communications is expected to generate 0.91 times more return on investment than WillScot Mobile. However, Iridium Communications is 1.1 times less risky than WillScot Mobile. It trades about 0.04 of its potential returns per unit of risk. WillScot Mobile Mini is currently generating about -0.03 per unit of risk. If you would invest  2,637  in Iridium Communications on September 26, 2024 and sell it today you would earn a total of  157.00  from holding Iridium Communications or generate 5.95% return on investment over 90 days.

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

Iridium Communications  vs.  WillScot Mobile Mini

Iridium Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WillScot Mobile Mini

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WillScot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WillScot Mobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Iridium Communications and WillScot Mobile

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

The idea behind Iridium Communications and WillScot Mobile Mini 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.