Correlation Between Willdan and Shift4 Payments

Can any of the company-specific risk be diversified away by investing in both Willdan and Shift4 Payments 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 Willdan and Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Willdan Group and Shift4 Payments, you can compare the effects of market volatilities on Willdan and Shift4 Payments 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 Willdan with a short position of Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willdan and Shift4 Payments.

Diversification Opportunities for Willdan and Shift4 Payments

-0.45

Correlation Coefficient

Willdan  Shift4 Payments

Very good diversification

The 3 months correlation between Willdan and Shift4 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments and Willdan 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 Willdan Group are associated (or correlated) with Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of Willdan i.e., Willdan and Shift4 Payments go up and down completely randomly.

Pair Corralation between Willdan and Shift4 Payments

Given the investment horizon of 90 days Willdan Group is expected to generate 2.24 times more return on investment than Shift4 Payments. However, Willdan is 2.24 times more volatile than Shift4 Payments. It trades about 0.21 of its potential returns per unit of risk. Shift4 Payments is currently generating about -0.26 per unit of risk. If you would invest  3,112  in Willdan Group on January 4, 2025 and sell it today you would earn a total of  926.00  from holding Willdan Group or generate 29.76% return on investment over 90 days.

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

Willdan Group  vs.  Shift4 Payments

Willdan Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Shift4 Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Willdan and Shift4 Payments

The main advantage of trading using opposite Willdan and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willdan position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.

The idea behind Willdan Group and Shift4 Payments 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.