Correlation Between Embraer SA and WESCO International
Can any of the company-specific risk be diversified away by investing in both Embraer SA and WESCO International 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 Embraer SA and WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embraer SA ADR and WESCO International, you can compare the effects of market volatilities on Embraer SA and WESCO International 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 Embraer SA with a short position of WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and WESCO International.
Diversification Opportunities for Embraer SA and WESCO International
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embraer and WESCO is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International and Embraer SA 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 Embraer SA ADR are associated (or correlated) with WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Embraer SA i.e., Embraer SA and WESCO International go up and down completely randomly.
Pair Corralation between Embraer SA and WESCO International
Considering the 90-day investment horizon Embraer SA ADR is expected to generate 0.94 times more return on investment than WESCO International. However, Embraer SA ADR is 1.06 times less risky than WESCO International. It trades about 0.12 of its potential returns per unit of risk. WESCO International is currently generating about 0.06 per unit of risk. If you would invest 1,604 in Embraer SA ADR on August 5, 2025 and sell it today you would earn a total of 4,844 from holding Embraer SA ADR or generate 302.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embraer SA ADR vs. WESCO International
Performance |
| Timeline |
| Embraer SA ADR |
| WESCO International |
Embraer SA and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and WESCO International
The main advantage of trading using opposite Embraer SA and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.| Embraer SA vs. Huntington Ingalls Industries | Embraer SA vs. Leonardo DRS, Common | Embraer SA vs. Acuity Brands | Embraer SA vs. CAE Inc |
| WESCO International vs. Pool Corporation | WESCO International vs. Core Main | WESCO International vs. Applied Industrial Technologies | WESCO International vs. Owens Corning |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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