Correlation Between Elmo Software and Wabash National

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

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

Diversification Opportunities for Elmo Software and Wabash National

-0.76

Correlation Coefficient

Elmo Software  Wabash National

Pay attention - limited upside

The 3 months correlation between Elmo and Wabash is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elmo Software Limited and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Elmo Software 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 Elmo Software Limited are associated (or correlated) with Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Elmo Software i.e., Elmo Software and Wabash National go up and down completely randomly.

Pair Corralation between Elmo Software and Wabash National

If you would invest  335.00  in Elmo Software Limited on March 7, 2024 and sell it today you would earn a total of  0.00  from holding Elmo Software Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Elmo Software Limited  vs.  Wabash National

Elmo Software Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elmo Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Elmo Software is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Elmo Software and Wabash National

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

The idea behind Elmo Software Limited and Wabash National 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.