Correlation Between Wabash National and Terex
Can any of the company-specific risk be diversified away by investing in both Wabash National and Terex 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 Terex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Terex, you can compare the effects of market volatilities on Wabash National and Terex 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 Terex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Terex.
Diversification Opportunities for Wabash National and Terex
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wabash and Terex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex 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 Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Wabash National i.e., Wabash National and Terex go up and down completely randomly.
Pair Corralation between Wabash National and Terex
Considering the 90-day investment horizon Wabash National is expected to under-perform the Terex. In addition to that, Wabash National is 1.14 times more volatile than Terex. It trades about -0.11 of its total potential returns per unit of risk. Terex is currently generating about 0.14 per unit of volatility. If you would invest 4,520 in Terex on October 20, 2024 and sell it today you would earn a total of 201.00 from holding Terex or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Wabash National vs. Terex
Performance |
| Timeline |
| Wabash National |
| Terex |
Wabash National and Terex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Terex
The main advantage of trading using opposite Wabash National and Terex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Terex 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 Terex will offset losses from the drop in Terex's long position.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| Terex vs. Oshkosh | Terex vs. Astec Industries | Terex vs. Hyster Yale Materials Handling | Terex vs. Manitowoc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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