Correlation Between Wabash National and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both Wabash National and Daimler Truck 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 Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Daimler Truck Holding, you can compare the effects of market volatilities on Wabash National and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Daimler Truck.
Diversification Opportunities for Wabash National and Daimler Truck
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wabash and Daimler is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Wabash National i.e., Wabash National and Daimler Truck go up and down completely randomly.
Pair Corralation between Wabash National and Daimler Truck
Considering the 90-day investment horizon Wabash National is expected to generate 1.12 times more return on investment than Daimler Truck. However, Wabash National is 1.12 times more volatile than Daimler Truck Holding. It trades about 0.29 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about -0.24 per unit of risk. If you would invest 1,745 in Wabash National on September 2, 2024 and sell it today you would earn a total of 238.00 from holding Wabash National or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. Daimler Truck Holding
Performance |
| Timeline |
| Wabash National |
| Daimler Truck Holding |
Wabash National and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Daimler Truck
The main advantage of trading using opposite Wabash National and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| Daimler Truck vs. American Premium Water | Daimler Truck vs. Arts Way Manufacturing Co | Daimler Truck vs. Astec Industries | Daimler Truck vs. Alamo Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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