Correlation Between Wabash National and Titan International

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Can any of the company-specific risk be diversified away by investing in both Wabash National and Titan International 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 Titan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Titan International, you can compare the effects of market volatilities on Wabash National and Titan International 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 Titan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Titan International.

Diversification Opportunities for Wabash National and Titan International

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Wabash and Titan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International 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 Titan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan International has no effect on the direction of Wabash National i.e., Wabash National and Titan International go up and down completely randomly.

Pair Corralation between Wabash National and Titan International

Considering the 90-day investment horizon Wabash National is expected to generate 0.81 times more return on investment than Titan International. However, Wabash National is 1.23 times less risky than Titan International. It trades about 0.12 of its potential returns per unit of risk. Titan International is currently generating about -0.19 per unit of risk. If you would invest  2,787  in Wabash National on December 29, 2023 and sell it today you would earn a total of  156.00  from holding Wabash National or generate 5.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Wabash National  vs.  Titan International

 Performance 
       Timeline  
Wabash National 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Wabash National are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Wabash National exhibited solid returns over the last few months and may actually be approaching a breakup point.
Titan International 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Titan International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Wabash National and Titan International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wabash National and Titan International

The main advantage of trading using opposite Wabash National and Titan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National position performs unexpectedly, Titan International 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 Titan International will offset losses from the drop in Titan International's long position.
The idea behind Wabash National and Titan International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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