Correlation Between WD 40 and Ecovyst

Can any of the company-specific risk be diversified away by investing in both WD 40 and Ecovyst 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 WD 40 and Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WD 40 Company and Ecovyst, you can compare the effects of market volatilities on WD 40 and Ecovyst 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 WD 40 with a short position of Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and Ecovyst.

Diversification Opportunities for WD 40 and Ecovyst

0.86

Correlation Coefficient

WD 40  Ecovyst

Very poor diversification

The 3 months correlation between WDFC and Ecovyst is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and WD 40 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 WD 40 Company are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of WD 40 i.e., WD 40 and Ecovyst go up and down completely randomly.

Pair Corralation between WD 40 and Ecovyst

Given the investment horizon of 90 days WD 40 is expected to generate 2.42 times less return on investment than Ecovyst. But when comparing it to its historical volatility, WD 40 Company is 2.14 times less risky than Ecovyst. It trades about 0.07 of its potential returns per unit of risk. Ecovyst is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  668.00  in Ecovyst on September 13, 2024 and sell it today you would earn a total of  89.00  from holding Ecovyst or generate 13.32% return on investment over 90 days.

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

WD 40 Company  vs.  Ecovyst

WD 40 Company

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WD 40 Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, WD 40 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ecovyst

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WD 40 and Ecovyst

The main advantage of trading using opposite WD 40 and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.

The idea behind WD 40 Company and Ecovyst 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.