Correlation Between CoreCivic and Wabash National

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

By analyzing existing cross correlation between CoreCivic 475 percent and Wabash National, you can compare the effects of market volatilities on CoreCivic 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 CoreCivic with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreCivic and Wabash National.

Diversification Opportunities for CoreCivic and Wabash National

0.61

Correlation Coefficient

CoreCivic  Wabash National

Poor diversification

The 3 months correlation between CoreCivic and Wabash is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic 475 percent and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and CoreCivic 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 CoreCivic 475 percent 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 CoreCivic i.e., CoreCivic and Wabash National go up and down completely randomly.

Pair Corralation between CoreCivic and Wabash National

Assuming the 90 days trading horizon CoreCivic 475 percent is expected to generate 1.28 times more return on investment than Wabash National. However, CoreCivic is 1.28 times more volatile than Wabash National. It trades about -0.21 of its potential returns per unit of risk. Wabash National is currently generating about -0.36 per unit of risk. If you would invest  9,692  in CoreCivic 475 percent on October 9, 2024 and sell it today you would lose (998.00) from holding CoreCivic 475 percent or give up 10.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

CoreCivic 475 percent  vs.  Wabash National

CoreCivic 475 percent

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic 475 percent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CoreCivic is not utilizing all of its potentials. The current stock price disturbance, 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 rather sound basic indicators, Wabash National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CoreCivic and Wabash National

The main advantage of trading using opposite CoreCivic and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreCivic 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 CoreCivic 475 percent 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 Stocks Directory module to find actively traded stocks across global markets.