Correlation Between Wabash National and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Wabash National and Ambev SA 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 Wabash National and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Ambev SA ADR, you can compare the effects of market volatilities on Wabash National and Ambev SA 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 Wabash National with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Ambev SA.
Diversification Opportunities for Wabash National and Ambev SA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wabash and Ambev is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Wabash National 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 Wabash National are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Wabash National i.e., Wabash National and Ambev SA go up and down completely randomly.
Pair Corralation between Wabash National and Ambev SA
Considering the 90-day investment horizon Wabash National is expected to generate 1.2 times more return on investment than Ambev SA. However, Wabash National is 1.2 times more volatile than Ambev SA ADR. It trades about -0.06 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.14 per unit of risk. If you would invest 1,864 in Wabash National on October 11, 2024 and sell it today you would lose (180.00) from holding Wabash National or give up 9.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Wabash National vs. Ambev SA ADR
Performance |
Timeline |
Wabash National |
Ambev SA ADR |
Wabash National and Ambev SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wabash National and Ambev SA
The main advantage of trading using opposite Wabash National and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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