Correlation Between Ashtead Gro and Wolters Kluwer

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

By analyzing existing cross correlation between Ashtead Gro and Wolters Kluwer NV, you can compare the effects of market volatilities on Ashtead Gro and Wolters Kluwer 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 Ashtead Gro with a short position of Wolters Kluwer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Gro and Wolters Kluwer.

Diversification Opportunities for Ashtead Gro and Wolters Kluwer

-0.17

Correlation Coefficient

Ashtead Gro  Wolters Kluwer

Good diversification

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

Pair Corralation between Ashtead Gro and Wolters Kluwer

If you would invest  27,766  in Ashtead Gro on September 4, 2024 and sell it today you would earn a total of  4,622  from holding Ashtead Gro or generate 16.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ashtead Gro  vs.  Wolters Kluwer NV

Ashtead Gro

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Gro are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ashtead Gro showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ashtead Gro and Wolters Kluwer

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

The idea behind Ashtead Gro and Wolters Kluwer NV 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.