Correlation Between Wabash National and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Wabash National and NETGEAR 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 NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and NETGEAR, you can compare the effects of market volatilities on Wabash National and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and NETGEAR.
Diversification Opportunities for Wabash National and NETGEAR
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wabash and NETGEAR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Wabash National i.e., Wabash National and NETGEAR go up and down completely randomly.
Pair Corralation between Wabash National and NETGEAR
Considering the 90-day investment horizon Wabash National is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 1.57 times less risky than NETGEAR. The stock trades about -0.01 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,373 in NETGEAR on September 3, 2024 and sell it today you would earn a total of 1,087 from holding NETGEAR or generate 79.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. NETGEAR
Performance |
| Timeline |
| Wabash National |
| NETGEAR |
Wabash National and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and NETGEAR
The main advantage of trading using opposite Wabash National and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Wabash National vs. Manitowoc | Wabash National vs. Alamo Group | Wabash National vs. AGCO Corporation | Wabash National vs. Hyster Yale Materials Handling |
| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Motorola Solutions | NETGEAR vs. Cisco Systems |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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