Correlation Between Shyft and Wabash National

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

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

Diversification Opportunities for Shyft and Wabash National

0.74

Correlation Coefficient

Shyft  Wabash National

Poor diversification

The 3 months correlation between Shyft and Wabash is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Shyft Group and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Shyft 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 The Shyft Group 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 Shyft i.e., Shyft and Wabash National go up and down completely randomly.

Pair Corralation between Shyft and Wabash National

Assuming the 90 days horizon The Shyft Group is expected to generate 1.49 times more return on investment than Wabash National. However, Shyft is 1.49 times more volatile than Wabash National. It trades about 0.03 of its potential returns per unit of risk. Wabash National is currently generating about 0.0 per unit of risk. If you would invest  1,106  in The Shyft Group on September 29, 2024 and sell it today you would earn a total of  24.00  from holding The Shyft Group or generate 2.17% return on investment over 90 days.

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

The Shyft Group  vs.  Wabash National

Shyft Group

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Shyft Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shyft is not utilizing all of its potentials. The current 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. 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 Shyft and Wabash National

The main advantage of trading using opposite Shyft and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft 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 The Shyft Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.