Correlation Between BlockchainK2 Corp and Wabash National

Can any of the company-specific risk be diversified away by investing in both BlockchainK2 Corp 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 BlockchainK2 Corp and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlockchainK2 Corp and Wabash National, you can compare the effects of market volatilities on BlockchainK2 Corp 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 BlockchainK2 Corp with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlockchainK2 Corp and Wabash National.

Diversification Opportunities for BlockchainK2 Corp and Wabash National

0.13

Correlation Coefficient

BlockchainK2 Corp  Wabash National

Average diversification

The 3 months correlation between BlockchainK2 and Wabash is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding BlockchainK2 Corp and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and BlockchainK2 Corp 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 BlockchainK2 Corp 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 BlockchainK2 Corp i.e., BlockchainK2 Corp and Wabash National go up and down completely randomly.

Pair Corralation between BlockchainK2 Corp and Wabash National

Assuming the 90 days horizon BlockchainK2 Corp is expected to generate 4.51 times more return on investment than Wabash National. However, BlockchainK2 Corp is 4.51 times more volatile than Wabash National. It trades about 0.01 of its potential returns per unit of risk. Wabash National is currently generating about -0.02 per unit of risk. If you would invest  11.00  in BlockchainK2 Corp on September 15, 2024 and sell it today you would lose (2.20) from holding BlockchainK2 Corp or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BlockchainK2 Corp  vs.  Wabash National

BlockchainK2 Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlockchainK2 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, BlockchainK2 Corp is not utilizing all of its potentials. The latest 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 rather sound basic indicators, Wabash National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlockchainK2 Corp and Wabash National

The main advantage of trading using opposite BlockchainK2 Corp and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlockchainK2 Corp 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 BlockchainK2 Corp 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.