Correlation Between Astec Industries and Wabash National
Can any of the company-specific risk be diversified away by investing in both Astec Industries and Wabash National 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 Astec Industries and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astec Industries and Wabash National, you can compare the effects of market volatilities on Astec Industries and Wabash National 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 Astec Industries with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Wabash National.
Diversification Opportunities for Astec Industries and Wabash National
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astec and Wabash is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Astec Industries 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 Astec Industries are associated (or correlated) with Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Astec Industries i.e., Astec Industries and Wabash National go up and down completely randomly.
Pair Corralation between Astec Industries and Wabash National
Given the investment horizon of 90 days Astec Industries is expected to generate 1.12 times more return on investment than Wabash National. However, Astec Industries is 1.12 times more volatile than Wabash National. It trades about 0.08 of its potential returns per unit of risk. Wabash National is currently generating about -0.06 per unit of risk. If you would invest 3,190 in Astec Industries on November 1, 2024 and sell it today you would earn a total of 367.00 from holding Astec Industries or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astec Industries vs. Wabash National
Performance |
| Timeline |
| Astec Industries |
| Wabash National |
Astec Industries and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astec Industries and Wabash National
The main advantage of trading using opposite Astec Industries and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.| Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Shyft Group | Astec Industries vs. Rev Group | Astec Industries vs. Lindsay |
| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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