Correlation Between CVW CleanTech and Wabash National
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech 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 CVW CleanTech and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Wabash National, you can compare the effects of market volatilities on CVW CleanTech 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 CVW CleanTech with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Wabash National.
Diversification Opportunities for CVW CleanTech and Wabash National
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVW and Wabash is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech i.e., CVW CleanTech and Wabash National go up and down completely randomly.
Pair Corralation between CVW CleanTech and Wabash National
Assuming the 90 days horizon CVW CleanTech is expected to generate 3.89 times more return on investment than Wabash National. However, CVW CleanTech is 3.89 times more volatile than Wabash National. It trades about 0.03 of its potential returns per unit of risk. Wabash National is currently generating about -0.03 per unit of risk. If you would invest 75.00 in CVW CleanTech on August 27, 2024 and sell it today you would lose (13.00) from holding CVW CleanTech or give up 17.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Wabash National
Performance |
| Timeline |
| CVW CleanTech |
| Wabash National |
CVW CleanTech and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Wabash National
The main advantage of trading using opposite CVW CleanTech and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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.| CVW CleanTech vs. Legacy Education | CVW CleanTech vs. NVIDIA | CVW CleanTech vs. Apple Inc | CVW CleanTech vs. Microsoft |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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