Correlation Between Blue Moon and Wabash National

Can any of the company-specific risk be diversified away by investing in both Blue Moon and Wabash National 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 Blue Moon and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Moon Metals and Wabash National, you can compare the effects of market volatilities on Blue Moon and Wabash National 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 Blue Moon with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Wabash National.

Diversification Opportunities for Blue Moon and Wabash National

-0.02

Correlation Coefficient

Blue Moon  Wabash National

Good diversification

The 3 months correlation between Blue and Wabash is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Blue Moon i.e., Blue Moon and Wabash National go up and down completely randomly.

Pair Corralation between Blue Moon and Wabash National

Assuming the 90 days horizon Blue Moon Metals is expected to under-perform the Wabash National. But the pink sheet apears to be less risky and, when comparing its historical volatility, Blue Moon Metals is 1.05 times less risky than Wabash National. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Wabash National is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,856  in Wabash National on September 20, 2024 and sell it today you would lose (146.00) from holding Wabash National or give up 7.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Blue Moon Metals  vs.  Wabash National

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Wabash National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Blue Moon and Wabash National

The main advantage of trading using opposite Blue Moon and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Moon position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.

The idea behind Blue Moon Metals and Wabash National pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.