Correlation Between Hyster Yale and Wabash National

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

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

Diversification Opportunities for Hyster Yale and Wabash National

-0.48

Correlation Coefficient

Hyster Yale  Wabash National

Very good diversification

The 3 months correlation between Hyster and Wabash is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and Wabash National go up and down completely randomly.

Pair Corralation between Hyster Yale and Wabash National

Assuming the 90 days trading horizon Hyster Yale Materials Handling is expected to under-perform the Wabash National. In addition to that, Hyster Yale is 1.27 times more volatile than Wabash National. It trades about -0.07 of its total potential returns per unit of risk. Wabash National is currently generating about -0.02 per unit of volatility. If you would invest  1,702  in Wabash National on September 28, 2024 and sell it today you would lose (72.00) from holding Wabash National or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hyster Yale Materials Handling  vs.  Wabash National

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company 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. Despite nearly stable basic indicators, Wabash National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hyster Yale and Wabash National

The main advantage of trading using opposite Hyster Yale and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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 Hyster Yale Materials Handling 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.