Correlation Between BRP and Wabash National
Can any of the company-specific risk be diversified away by investing in both BRP 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 BRP and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and Wabash National, you can compare the effects of market volatilities on BRP 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 BRP with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Wabash National.
Diversification Opportunities for BRP and Wabash National
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between BRP and Wabash is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and BRP 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 BRP Inc 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 BRP i.e., BRP and Wabash National go up and down completely randomly.
Pair Corralation between BRP and Wabash National
Given the investment horizon of 90 days BRP Inc is expected to under-perform the Wabash National. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 1.03 times less risky than Wabash National. The stock trades about -0.01 of its potential returns per unit of risk. The Wabash National is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,744 in Wabash National on September 1, 2024 and sell it today you would earn a total of 239.00 from holding Wabash National or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRP Inc vs. Wabash National
Performance |
| Timeline |
| BRP Inc |
| Wabash National |
BRP and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and Wabash National
The main advantage of trading using opposite BRP and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP 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.The idea behind BRP Inc and Wabash National 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.| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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