Correlation Between WD 40 and AdvanSix

Can any of the company-specific risk be diversified away by investing in both WD 40 and AdvanSix 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 AdvanSix 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 AdvanSix, you can compare the effects of market volatilities on WD 40 and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and AdvanSix.

Diversification Opportunities for WD 40 and AdvanSix

0.62

Correlation Coefficient

WD 40  AdvanSix

Poor diversification

The 3 months correlation between WDFC and AdvanSix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of WD 40 i.e., WD 40 and AdvanSix go up and down completely randomly.

Pair Corralation between WD 40 and AdvanSix

Given the investment horizon of 90 days WD 40 Company is expected to under-perform the AdvanSix. But the stock apears to be less risky and, when comparing its historical volatility, WD 40 Company is 1.57 times less risky than AdvanSix. The stock trades about -0.06 of its potential returns per unit of risk. The AdvanSix is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,087  in AdvanSix on April 28, 2025 and sell it today you would earn a total of  106.00  from holding AdvanSix or generate 5.08% return on investment over 90 days.

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

WD 40 Company  vs.  AdvanSix

WD 40 Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days WD 40 Company has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

AdvanSix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AdvanSix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, AdvanSix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WD 40 and AdvanSix

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

The idea behind WD 40 Company and AdvanSix 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.