Correlation Between Wabash National and Ideanomics

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

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

Diversification Opportunities for Wabash National and Ideanomics

-0.17

Correlation Coefficient

Wabash National  Ideanomics

Good diversification

The 3 months correlation between Wabash and Ideanomics is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics 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 Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Wabash National i.e., Wabash National and Ideanomics go up and down completely randomly.

Pair Corralation between Wabash National and Ideanomics

Considering the 90-day investment horizon Wabash National is expected to generate 0.05 times more return on investment than Ideanomics. However, Wabash National is 20.22 times less risky than Ideanomics. It trades about -0.02 of its potential returns per unit of risk. Ideanomics is currently generating about -0.03 per unit of risk. If you would invest  1,856  in Wabash National on September 20, 2024 and sell it today you would lose (29.00) from holding Wabash National or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Wabash National  vs.  Ideanomics

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.

Ideanomics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wabash National and Ideanomics

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

The idea behind Wabash National and Ideanomics 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .