Correlation Between Willscot Mobile and Federal Home

Can any of the company-specific risk be diversified away by investing in both Willscot Mobile and Federal Home 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 Federal Home 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 Federal Home Loan, you can compare the effects of market volatilities on Willscot Mobile and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willscot Mobile and Federal Home.

Diversification Opportunities for Willscot Mobile and Federal Home

-0.22

Correlation Coefficient

Willscot Mobile  Federal Home

Very good diversification

The 3 months correlation between Willscot and Federal is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Willscot Mobile i.e., Willscot Mobile and Federal Home go up and down completely randomly.

Pair Corralation between Willscot Mobile and Federal Home

Considering the 90-day investment horizon Willscot Mobile Mini is expected to under-perform the Federal Home. But the stock apears to be less risky and, when comparing its historical volatility, Willscot Mobile Mini is 1.44 times less risky than Federal Home. The stock trades about -0.5 of its potential returns per unit of risk. The Federal Home Loan is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Federal Home Loan on January 30, 2024 and sell it today you would lose (38.00) from holding Federal Home Loan or give up 6.61% of portfolio value over 90 days.

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

Willscot Mobile Mini  vs.  Federal Home Loan

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 unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Federal Home Loan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federal Home Loan has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Federal Home is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Willscot Mobile and Federal Home

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

The idea behind Willscot Mobile Mini and Federal Home Loan 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.