Correlation Between Ballistic Recovery and Wabash National

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

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

Diversification Opportunities for Ballistic Recovery and Wabash National

0.48

Correlation Coefficient

Ballistic Recovery  Wabash National

Very weak diversification

The 3 months correlation between Ballistic and Wabash is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ballistic Recovery Systems and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Ballistic Recovery 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 Ballistic Recovery Systems 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 Ballistic Recovery i.e., Ballistic Recovery and Wabash National go up and down completely randomly.

Pair Corralation between Ballistic Recovery and Wabash National

Given the investment horizon of 90 days Ballistic Recovery Systems is expected to generate 3.08 times more return on investment than Wabash National. However, Ballistic Recovery is 3.08 times more volatile than Wabash National. It trades about -0.13 of its potential returns per unit of risk. Wabash National is currently generating about -0.39 per unit of risk. If you would invest  0.05  in Ballistic Recovery Systems on November 28, 2024 and sell it today you would lose (0.03) from holding Ballistic Recovery Systems or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.55%
Values	Daily Returns

Ballistic Recovery Systems  vs.  Wabash National

Ballistic Recovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballistic Recovery Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Wabash National

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ballistic Recovery and Wabash National

The main advantage of trading using opposite Ballistic Recovery and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballistic Recovery 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 Ballistic Recovery Systems 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.