Correlation Between Willdan and MillerKnoll

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

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

Diversification Opportunities for Willdan and MillerKnoll

-0.7

Correlation Coefficient

Willdan  MillerKnoll

Excellent diversification

The 3 months correlation between Willdan and MillerKnoll is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and MillerKnoll in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MillerKnoll and Willdan 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 Willdan Group are associated (or correlated) with MillerKnoll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MillerKnoll has no effect on the direction of Willdan i.e., Willdan and MillerKnoll go up and down completely randomly.

Pair Corralation between Willdan and MillerKnoll

Given the investment horizon of 90 days Willdan is expected to generate 21.96 times less return on investment than MillerKnoll. In addition to that, Willdan is 1.12 times more volatile than MillerKnoll. It trades about 0.01 of its total potential returns per unit of risk. MillerKnoll is currently generating about 0.28 per unit of volatility. If you would invest  2,263  in MillerKnoll on September 2, 2024 and sell it today you would earn a total of  251.00  from holding MillerKnoll or generate 11.09% return on investment over 90 days.

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

Willdan Group  vs.  MillerKnoll

Willdan Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

MillerKnoll

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MillerKnoll has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Willdan and MillerKnoll

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

The idea behind Willdan Group and MillerKnoll 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.