Correlation Between HE Equipment and Willscot Mobile

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

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

Diversification Opportunities for HE Equipment and Willscot Mobile

-0.19

Correlation Coefficient

HE Equipment  Willscot Mobile

Good diversification

The 3 months correlation between HEES and Willscot is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Willscot Mobile go up and down completely randomly.

Pair Corralation between HE Equipment and Willscot Mobile

Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.13 times more return on investment than Willscot Mobile. However, HE Equipment is 1.13 times more volatile than Willscot Mobile Mini. It trades about 0.05 of its potential returns per unit of risk. Willscot Mobile Mini is currently generating about -0.02 per unit of risk. If you would invest  4,145  in HE Equipment Services on September 4, 2024 and sell it today you would earn a total of  1,690  from holding HE Equipment Services or generate 40.77% return on investment over 90 days.

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

HE Equipment Services  vs.  Willscot Mobile Mini

HE Equipment Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, HE Equipment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Willscot Mobile Mini

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willscot Mobile Mini are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Willscot Mobile is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HE Equipment and Willscot Mobile

The main advantage of trading using opposite HE Equipment and Willscot Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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 HE Equipment Services 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.