Correlation Between Toro and Wabash National

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

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

Diversification Opportunities for Toro and Wabash National

-0.49

Correlation Coefficient

Toro  Wabash National

Very good diversification

The 3 months correlation between Toro and Wabash is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Toro and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Toro 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 Toro 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 Toro i.e., Toro and Wabash National go up and down completely randomly.

Pair Corralation between Toro and Wabash National

Given the investment horizon of 90 days Toro is expected to generate 3.88 times more return on investment than Wabash National. However, Toro is 3.88 times more volatile than Wabash National. It trades about 0.2 of its potential returns per unit of risk. Wabash National is currently generating about -0.5 per unit of risk. If you would invest  247.00  in Toro on October 11, 2024 and sell it today you would earn a total of  67.00  from holding Toro or generate 27.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Toro  vs.  Wabash National

Toro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Toro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 Toro and Wabash National

The main advantage of trading using opposite Toro and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro 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 Toro 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 Commodity Directory module to find actively traded commodities issued by global exchanges.