Correlation Between WE Source and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both WE Source and Diageo PLC 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 WE Source and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WE Source Corp and Diageo PLC ADR, you can compare the effects of market volatilities on WE Source and Diageo PLC 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 WE Source with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of WE Source and Diageo PLC.
Diversification Opportunities for WE Source and Diageo PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WESC and Diageo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WE Source Corp and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and WE Source 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 WE Source Corp are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of WE Source i.e., WE Source and Diageo PLC go up and down completely randomly.
Pair Corralation between WE Source and Diageo PLC
Given the investment horizon of 90 days WE Source Corp is expected to under-perform the Diageo PLC. In addition to that, WE Source is 5.77 times more volatile than Diageo PLC ADR. It trades about -0.09 of its total potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.05 per unit of volatility. If you would invest 10,950 in Diageo PLC ADR on July 21, 2025 and sell it today you would lose (1,187) from holding Diageo PLC ADR or give up 10.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 97.67% |
Values | Daily Returns |
WE Source Corp vs. Diageo PLC ADR
Performance |
Timeline |
WE Source Corp |
Diageo PLC ADR |
WE Source and Diageo PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WE Source and Diageo PLC
The main advantage of trading using opposite WE Source and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WE Source position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.WE Source vs. Gentech Holdings | WE Source vs. Speedemissions | WE Source vs. Greenway Technology | WE Source vs. Carroll Shelby International |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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