Correlation Between WD 40 and Cabot

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

Diversification Opportunities for WD 40 and Cabot

0.65

Correlation Coefficient

WD 40  Cabot

Poor diversification

The 3 months correlation between WDFC and Cabot is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of WD 40 i.e., WD 40 and Cabot go up and down completely randomly.

Pair Corralation between WD 40 and Cabot

Given the investment horizon of 90 days WD 40 Company is expected to generate 0.9 times more return on investment than Cabot. However, WD 40 Company is 1.11 times less risky than Cabot. It trades about -0.1 of its potential returns per unit of risk. Cabot is currently generating about -0.23 per unit of risk. If you would invest  21,561  in WD 40 Company on August 26, 2025 and sell it today you would lose (2,252) from holding WD 40 Company or give up 10.44% of portfolio value over 90 days.

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

WD 40 Company  vs.  Cabot

WD 40 Company

Risk-Adjusted Performance

Weakest

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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cabot

Risk-Adjusted Performance

Weakest

Over the last 90 days Cabot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in December 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with WD 40 and Cabot

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

The idea behind WD 40 Company and Cabot 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..