Correlation Between Wabash National and CubicFarm Systems
Can any of the company-specific risk be diversified away by investing in both Wabash National and CubicFarm Systems 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 CubicFarm Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and CubicFarm Systems Corp, you can compare the effects of market volatilities on Wabash National and CubicFarm Systems 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 CubicFarm Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and CubicFarm Systems.
Diversification Opportunities for Wabash National and CubicFarm Systems
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wabash and CubicFarm is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and CubicFarm Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubicFarm Systems Corp 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 CubicFarm Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubicFarm Systems Corp has no effect on the direction of Wabash National i.e., Wabash National and CubicFarm Systems go up and down completely randomly.
Pair Corralation between Wabash National and CubicFarm Systems
Considering the 90-day investment horizon Wabash National is expected to under-perform the CubicFarm Systems. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 59.46 times less risky than CubicFarm Systems. The stock trades about -0.17 of its potential returns per unit of risk. The CubicFarm Systems Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 8.00 in CubicFarm Systems Corp on December 5, 2024 and sell it today you would earn a total of 17.00 from holding CubicFarm Systems Corp or generate 212.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Wabash National vs. CubicFarm Systems Corp
Performance |
Timeline |
Wabash National |
CubicFarm Systems Corp |
Wabash National and CubicFarm Systems Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wabash National and CubicFarm Systems
The main advantage of trading using opposite Wabash National and CubicFarm Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, CubicFarm Systems 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 CubicFarm Systems will offset losses from the drop in CubicFarm Systems' 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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