Correlation Between WAB and KEY

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

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

Diversification Opportunities for WAB and KEY

-0.28

Correlation Coefficient

WAB  KEY

Very good diversification

The 3 months correlation between WAB and KEY is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding WAB and KEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY and WAB 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 WAB are associated (or correlated) with KEY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY has no effect on the direction of WAB i.e., WAB and KEY go up and down completely randomly.

Pair Corralation between WAB and KEY

If you would invest  0.00  in WAB on September 1, 2024 and sell it today you would earn a total of  0.00  from holding WAB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.76%
Values	Daily Returns

WAB  vs.  KEY

WAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, WAB is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

KEY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for KEY shareholders.

Pair Trading with WAB and KEY

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

The idea behind WAB and KEY 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.