Correlation Between Adient PLC and Wabash National
Can any of the company-specific risk be diversified away by investing in both Adient PLC 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 Adient PLC and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Wabash National, you can compare the effects of market volatilities on Adient PLC 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 Adient PLC with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Wabash National.
Diversification Opportunities for Adient PLC and Wabash National
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Adient and Wabash is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Adient PLC 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 Adient PLC 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 Adient PLC i.e., Adient PLC and Wabash National go up and down completely randomly.
Pair Corralation between Adient PLC and Wabash National
Given the investment horizon of 90 days Adient PLC is expected to generate 3.5 times less return on investment than Wabash National. In addition to that, Adient PLC is 1.09 times more volatile than Wabash National. It trades about 0.01 of its total potential returns per unit of risk. Wabash National is currently generating about 0.05 per unit of volatility. If you would invest 1,388 in Wabash National on February 3, 2024 and sell it today you would earn a total of 901.00 from holding Wabash National or generate 64.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Adient PLC vs. Wabash National
Performance |
Timeline |
Adient PLC |
Wabash National |
Adient PLC and Wabash National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adient PLC and Wabash National
The main advantage of trading using opposite Adient PLC and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC 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.Adient PLC vs. Hyliion Holdings Corp | Adient PLC vs. Aeva Technologies | Adient PLC vs. Aeye Inc | Adient PLC vs. Westport Fuel Systems |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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