Can any of the company-specific risk be diversified away by investing in both Willscot Mobile and PROG Holdings 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 Willscot Mobile and PROG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willscot Mobile Mini and PROG Holdings, you can compare the effects of market volatilities on Willscot Mobile and PROG Holdings 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 Willscot Mobile with a short position of PROG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willscot Mobile and PROG Holdings.
Diversification Opportunities for Willscot Mobile and PROG Holdings
The 3 months correlation between Willscot and PROG is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings and Willscot Mobile 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 Willscot Mobile Mini are associated (or correlated) with PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Willscot Mobile i.e., Willscot Mobile and PROG Holdings go up and down completely randomly.
Pair Corralation between Willscot Mobile and PROG Holdings
Considering the 90-day investment horizon Willscot Mobile Mini is expected to under-perform the PROG Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Willscot Mobile Mini is 1.16 times less risky than PROG Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The PROG Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,164 in PROG Holdings on March 6, 2024 and sell it today you would earn a total of 508.00 from holding PROG Holdings or generate 16.06% return on investment over 90 days.
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 unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, PROG Holdings reported solid returns over the last few months and may actually be approaching a breakup point.