Correlation Between Wabash National and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Wabash National and Dow Jones 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 Wabash National and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Dow Jones Industrial, you can compare the effects of market volatilities on Wabash National and Dow Jones 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 Wabash National with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Dow Jones.
Diversification Opportunities for Wabash National and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wabash and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Wabash National 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 Wabash National are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Wabash National i.e., Wabash National and Dow Jones go up and down completely randomly.
Pair Corralation between Wabash National and Dow Jones
Assuming the 90 days horizon Wabash National is expected to generate 2.43 times more return on investment than Dow Jones. However, Wabash National is 2.43 times more volatile than Dow Jones Industrial. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 1,620 in Wabash National on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Wabash National or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Wabash National vs. Dow Jones Industrial
Performance |
| Timeline |
Wabash National and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Wabash National
Pair trading matchups for Wabash National
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Wabash National and Dow Jones
The main advantage of trading using opposite Wabash National and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Wabash National vs. Superior Plus Corp | Wabash National vs. NMI Holdings | Wabash National vs. Origin Agritech | Wabash National vs. SIVERS SEMICONDUCTORS AB |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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