Correlation Between VINCI and WAB

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

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

Diversification Opportunities for VINCI and WAB

0.38

Correlation Coefficient

VINCI  WAB

Weak diversification

The 3 months correlation between VINCI and WAB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VINCI and WAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WAB and VINCI 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 VINCI are associated (or correlated) with WAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WAB has no effect on the direction of VINCI i.e., VINCI and WAB go up and down completely randomly.

Pair Corralation between VINCI and WAB

If you would invest  904.00  in VINCI on August 30, 2024 and sell it today you would earn a total of  291.00  from holding VINCI or generate 32.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

VINCI  vs.  WAB

VINCI

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VINCI are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, VINCI exhibited solid returns over the last few months and may actually be approaching a breakup point.

WAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, WAB is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VINCI and WAB

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

The idea behind VINCI and WAB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.