Correlation Between WD 40 and Kronos Worldwide

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

Diversification Opportunities for WD 40 and Kronos Worldwide

0.56

Correlation Coefficient

WD 40  Kronos Worldwide

Very weak diversification

The 3 months correlation between WDFC and Kronos is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of WD 40 i.e., WD 40 and Kronos Worldwide go up and down completely randomly.

Pair Corralation between WD 40 and Kronos Worldwide

Given the investment horizon of 90 days WD 40 Company is expected to under-perform the Kronos Worldwide. But the stock apears to be less risky and, when comparing its historical volatility, WD 40 Company is 2.73 times less risky than Kronos Worldwide. The stock trades about -0.1 of its potential returns per unit of risk. The Kronos Worldwide is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Kronos Worldwide on May 28, 2025 and sell it today you would lose (10.00) from holding Kronos Worldwide or give up 1.56% of portfolio value over 90 days.

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

WD 40 Company  vs.  Kronos Worldwide

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 weak 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.

Kronos Worldwide

Risk-Adjusted Performance

Weakest

Over the last 90 days Kronos Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kronos Worldwide is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WD 40 and Kronos Worldwide

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

The idea behind WD 40 Company and Kronos Worldwide 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.