Correlation Between Visteon Corp and Wabash National
Can any of the company-specific risk be diversified away by investing in both Visteon 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 Visteon 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 Visteon Corp and Wabash National, you can compare the effects of market volatilities on Visteon 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 Visteon Corp with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and Wabash National.
Diversification Opportunities for Visteon Corp and Wabash National
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visteon and Wabash is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and Visteon 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 Visteon 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 Visteon Corp i.e., Visteon Corp and Wabash National go up and down completely randomly.
Pair Corralation between Visteon Corp and Wabash National
Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the Wabash National. But the stock apears to be less risky and, when comparing its historical volatility, Visteon Corp is 1.16 times less risky than Wabash National. The stock trades about -0.03 of its potential returns per unit of risk. The Wabash National is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,320 in Wabash National on September 8, 2024 and sell it today you would lose (389.00) from holding Wabash National or give up 16.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.56% |
Values | Daily Returns |
Visteon Corp vs. Wabash National
Performance |
Timeline |
Visteon Corp |
Wabash National |
Visteon Corp and Wabash National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visteon Corp and Wabash National
The main advantage of trading using opposite Visteon Corp and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon 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.Visteon Corp vs. Ford Motor | Visteon Corp vs. General Motors | Visteon Corp vs. Goodyear Tire Rubber | Visteon Corp vs. Li Auto |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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