Correlation Between Wabash National and Cromwell Property
Can any of the company-specific risk be diversified away by investing in both Wabash National and Cromwell Property 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 Cromwell Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Cromwell Property Group, you can compare the effects of market volatilities on Wabash National and Cromwell Property 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 Cromwell Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Cromwell Property.
Diversification Opportunities for Wabash National and Cromwell Property
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wabash and Cromwell is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property 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 Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of Wabash National i.e., Wabash National and Cromwell Property go up and down completely randomly.
Pair Corralation between Wabash National and Cromwell Property
Considering the 90-day investment horizon Wabash National is expected to under-perform the Cromwell Property. In addition to that, Wabash National is 2.43 times more volatile than Cromwell Property Group. It trades about -0.02 of its total potential returns per unit of risk. Cromwell Property Group is currently generating about -0.02 per unit of volatility. If you would invest 30.00 in Cromwell Property Group on September 4, 2024 and sell it today you would lose (2.00) from holding Cromwell Property Group or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Wabash National vs. Cromwell Property Group
Performance |
| Timeline |
| Wabash National |
| Cromwell Property |
Wabash National and Cromwell Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Cromwell Property
The main advantage of trading using opposite Wabash National and Cromwell Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Cromwell Property 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 Cromwell Property will offset losses from the drop in Cromwell Property's long position.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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