Correlation Between Wabash National and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Wabash National and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and AMCON Distributing, you can compare the effects of market volatilities on Wabash National and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and AMCON Distributing.
Diversification Opportunities for Wabash National and AMCON Distributing
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wabash and AMCON is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Wabash National i.e., Wabash National and AMCON Distributing go up and down completely randomly.
Pair Corralation between Wabash National and AMCON Distributing
Considering the 90-day investment horizon Wabash National is expected to generate 16.99 times less return on investment than AMCON Distributing. But when comparing it to its historical volatility, Wabash National is 2.14 times less risky than AMCON Distributing. It trades about 0.02 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12,100 in AMCON Distributing on September 13, 2024 and sell it today you would earn a total of 1,513 from holding AMCON Distributing or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. AMCON Distributing
Performance |
| Timeline |
| Wabash National |
| AMCON Distributing |
Wabash National and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and AMCON Distributing
The main advantage of trading using opposite Wabash National and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Wabash National vs. Aquagold International | Wabash National vs. Thrivent High Yield | Wabash National vs. Morningstar Unconstrained Allocation | Wabash National vs. Via Renewables |
| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Wolverine World Wide |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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