Correlation Between Timken and Willscot Mobile

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

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

Diversification Opportunities for Timken and Willscot Mobile

0.46

Correlation Coefficient

Timken  Willscot Mobile

Very weak diversification

The 3 months correlation between Timken and Willscot is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company 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 Timken 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 Timken Company 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 Timken i.e., Timken and Willscot Mobile go up and down completely randomly.

Pair Corralation between Timken and Willscot Mobile

Considering the 90-day investment horizon Timken Company is expected to under-perform the Willscot Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Timken Company is 1.34 times less risky than Willscot Mobile. The stock trades about -0.1 of its potential returns per unit of risk. The Willscot Mobile Mini is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,857  in Willscot Mobile Mini on September 27, 2024 and sell it today you would lose (477.00) from holding Willscot Mobile Mini or give up 12.37% of portfolio value over 90 days.

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

Timken Company  vs.  Willscot Mobile Mini

Timken Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timken Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Timken and Willscot Mobile

The main advantage of trading using opposite Timken and Willscot Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken 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 Timken Company 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.