Correlation Between Wabash National and Melexis NV
Can any of the company-specific risk be diversified away by investing in both Wabash National and Melexis NV 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 Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Melexis NV, you can compare the effects of market volatilities on Wabash National and Melexis NV 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 Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Melexis NV.
Diversification Opportunities for Wabash National and Melexis NV
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wabash and Melexis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Wabash National i.e., Wabash National and Melexis NV go up and down completely randomly.
Pair Corralation between Wabash National and Melexis NV
Considering the 90-day investment horizon Wabash National is expected to under-perform the Melexis NV. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 1.4 times less risky than Melexis NV. The stock trades about -0.02 of its potential returns per unit of risk. The Melexis NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,860 in Melexis NV on September 12, 2024 and sell it today you would earn a total of 565.00 from holding Melexis NV or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. Melexis NV
Performance |
| Timeline |
| Wabash National |
| Melexis NV |
Wabash National and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Melexis NV
The main advantage of trading using opposite Wabash National and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.| Wabash National vs. Manitowoc | Wabash National vs. Terex | Wabash National vs. Alamo Group | Wabash National vs. AGCO Corporation |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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