Correlation Between Wabash National and SIMON

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

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

Diversification Opportunities for Wabash National and SIMON

-0.01

Correlation Coefficient

Wabash National  SIMON

Good diversification

The 3 months correlation between Wabash and SIMON is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Wabash National i.e., Wabash National and SIMON go up and down completely randomly.

Pair Corralation between Wabash National and SIMON

Considering the 90-day investment horizon Wabash National is expected to under-perform the SIMON. In addition to that, Wabash National is 1.75 times more volatile than SIMON PPTY GROUP. It trades about -0.49 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.35 per unit of volatility. If you would invest  8,518  in SIMON PPTY GROUP on October 11, 2024 and sell it today you would lose (327.00) from holding SIMON PPTY GROUP or give up 3.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Wabash National  vs.  SIMON PPTY GROUP

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP investors.

Pair Trading with Wabash National and SIMON

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

The idea behind Wabash National and SIMON PPTY GROUP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.