Correlation Between WD 40 and Select Energy

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

Diversification Opportunities for WD 40 and Select Energy

-0.6

Correlation Coefficient

WD 40  Select Energy

Excellent diversification

The 3 months correlation between WDFC and Select is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Select Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Energy Services 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 Select Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Energy Services has no effect on the direction of WD 40 i.e., WD 40 and Select Energy go up and down completely randomly.

Pair Corralation between WD 40 and Select Energy

Given the investment horizon of 90 days WD 40 Company is expected to generate 0.49 times more return on investment than Select Energy. However, WD 40 Company is 2.03 times less risky than Select Energy. It trades about -0.03 of its potential returns per unit of risk. Select Energy Services is currently generating about -0.07 per unit of risk. If you would invest  23,501  in WD 40 Company on May 8, 2025 and sell it today you would lose (1,794) from holding WD 40 Company or give up 7.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

WD 40 Company  vs.  Select Energy Services

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.

Select Energy Services

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Select Energy Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Select Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WD 40 and Select Energy

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

The idea behind WD 40 Company and Select Energy Services 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.