Correlation Between Willdan and Genpact

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

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

Diversification Opportunities for Willdan and Genpact

-0.26

Correlation Coefficient

Willdan  Genpact

Very good diversification

The 3 months correlation between Willdan and Genpact is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Willdan i.e., Willdan and Genpact go up and down completely randomly.

Pair Corralation between Willdan and Genpact

Given the investment horizon of 90 days Willdan Group is expected to under-perform the Genpact. In addition to that, Willdan is 1.42 times more volatile than Genpact Limited. It trades about -0.44 of its total potential returns per unit of risk. Genpact Limited is currently generating about -0.33 per unit of volatility. If you would invest  4,600  in Genpact Limited on September 29, 2024 and sell it today you would lose (309.00) from holding Genpact Limited or give up 6.72% of portfolio value over 90 days.

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

Willdan Group  vs.  Genpact Limited

Willdan Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Genpact Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Willdan and Genpact

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

The idea behind Willdan Group and Genpact Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..