Correlation Between Wabash National and Shorepower Technologies

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

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

Diversification Opportunities for Wabash National and Shorepower Technologies

0.4

Correlation Coefficient

Wabash National  Shorepower Technologies

Very weak diversification

The 3 months correlation between Wabash and Shorepower is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Shorepower Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shorepower Technologies 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 Shorepower Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shorepower Technologies has no effect on the direction of Wabash National i.e., Wabash National and Shorepower Technologies go up and down completely randomly.

Pair Corralation between Wabash National and Shorepower Technologies

Considering the 90-day investment horizon Wabash National is expected to under-perform the Shorepower Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 1.61 times less risky than Shorepower Technologies. The stock trades about -0.19 of its potential returns per unit of risk. The Shorepower Technologies is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Shorepower Technologies on December 21, 2024 and sell it today you would lose (0.50) from holding Shorepower Technologies or give up 21.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Wabash National  vs.  Shorepower Technologies

Wabash National

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shorepower Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shorepower Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Wabash National and Shorepower Technologies

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

The idea behind Wabash National and Shorepower Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.