Correlation Between Wabash National and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Wabash National and HUTCHMED DRC 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 HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and HUTCHMED DRC, you can compare the effects of market volatilities on Wabash National and HUTCHMED DRC 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 HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and HUTCHMED DRC.
Diversification Opportunities for Wabash National and HUTCHMED DRC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wabash and HUTCHMED is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC 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 HUTCHMED DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED DRC has no effect on the direction of Wabash National i.e., Wabash National and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Wabash National and HUTCHMED DRC
Considering the 90-day investment horizon Wabash National is expected to under-perform the HUTCHMED DRC. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 1.01 times less risky than HUTCHMED DRC. The stock trades about -0.32 of its potential returns per unit of risk. The HUTCHMED DRC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,364 in HUTCHMED DRC on November 28, 2024 and sell it today you would earn a total of 309.00 from holding HUTCHMED DRC or generate 22.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. HUTCHMED DRC
Performance |
| Timeline |
| Wabash National |
| HUTCHMED DRC |
Wabash National and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and HUTCHMED DRC
The main advantage of trading using opposite Wabash National and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, HUTCHMED DRC 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 HUTCHMED DRC will offset losses from the drop in HUTCHMED DRC's long position.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| HUTCHMED DRC vs. ANI Pharmaceuticals | HUTCHMED DRC vs. Phibro Animal Health | HUTCHMED DRC vs. Prestige Brand Holdings | HUTCHMED DRC vs. Pacira BioSciences, |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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