Correlation Between Getty Realty and WESCO

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

By analyzing existing cross correlation between Getty Realty and WESCO Distribution 725, you can compare the effects of market volatilities on Getty Realty and WESCO 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 Getty Realty with a short position of WESCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Realty and WESCO.

Diversification Opportunities for Getty Realty and WESCO

-0.35

Correlation Coefficient

Getty Realty  WESCO

Very good diversification

The 3 months correlation between Getty and WESCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and WESCO Distribution 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO Distribution 725 and Getty Realty 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 Getty Realty are associated (or correlated) with WESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO Distribution 725 has no effect on the direction of Getty Realty i.e., Getty Realty and WESCO go up and down completely randomly.

Pair Corralation between Getty Realty and WESCO

Considering the 90-day investment horizon Getty Realty is expected to under-perform the WESCO. In addition to that, Getty Realty is 5.01 times more volatile than WESCO Distribution 725. It trades about -0.07 of its total potential returns per unit of risk. WESCO Distribution 725 is currently generating about 0.01 per unit of volatility. If you would invest  10,262  in WESCO Distribution 725 on September 28, 2024 and sell it today you would earn a total of  10.00  from holding WESCO Distribution 725 or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Getty Realty  vs.  WESCO Distribution 725

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

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

WESCO Distribution 725

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESCO Distribution 725 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Getty Realty and WESCO

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

The idea behind Getty Realty and WESCO Distribution 725 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..