Correlation Between Wallbox NV and Fabrinet

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

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

Diversification Opportunities for Wallbox NV and Fabrinet

0.33

Correlation Coefficient

Wallbox NV  Fabrinet

Weak diversification

The 3 months correlation between Wallbox and Fabrinet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wallbox NV and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Wallbox NV 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 Wallbox NV are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Wallbox NV i.e., Wallbox NV and Fabrinet go up and down completely randomly.

Pair Corralation between Wallbox NV and Fabrinet

Considering the 90-day investment horizon Wallbox NV is expected to under-perform the Fabrinet. In addition to that, Wallbox NV is 1.13 times more volatile than Fabrinet. It trades about -0.15 of its total potential returns per unit of risk. Fabrinet is currently generating about -0.02 per unit of volatility. If you would invest  22,037  in Fabrinet on December 3, 2024 and sell it today you would lose (2,032) from holding Fabrinet or give up 9.22% of portfolio value over 90 days.

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

Wallbox NV  vs.  Fabrinet

Wallbox NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wallbox NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fabrinet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fabrinet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Wallbox NV and Fabrinet

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

The idea behind Wallbox NV and Fabrinet 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..