Correlation Between Winnebago Industries and Ree Automotive

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

By analyzing existing cross correlation between Winnebago Industries and Ree Automotive Holding, you can compare the effects of market volatilities on Winnebago Industries and Ree Automotive 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 Winnebago Industries with a short position of Ree Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winnebago Industries and Ree Automotive.

Diversification Opportunities for Winnebago Industries and Ree Automotive

0.21

Correlation Coefficient

Winnebago Industries  Ree Automotive

Modest diversification

The 3 months correlation between Winnebago and Ree is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Winnebago Industries and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding and Winnebago Industries 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 Winnebago Industries are associated (or correlated) with Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of Winnebago Industries i.e., Winnebago Industries and Ree Automotive go up and down completely randomly.

Pair Corralation between Winnebago Industries and Ree Automotive

Considering the 90-day investment horizon Winnebago Industries is expected to generate 33.63 times less return on investment than Ree Automotive. But when comparing it to its historical volatility, Winnebago Industries is 3.42 times less risky than Ree Automotive. It trades about 0.02 of its potential returns per unit of risk. Ree Automotive Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Ree Automotive Holding on September 3, 2024 and sell it today you would earn a total of  443.00  from holding Ree Automotive Holding or generate 134.24% return on investment over 90 days.

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

Winnebago Industries  vs.  Ree Automotive Holding

Winnebago Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Winnebago Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Winnebago Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ree Automotive Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ree Automotive Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Ree Automotive exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winnebago Industries and Ree Automotive

The main advantage of trading using opposite Winnebago Industries and Ree Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winnebago Industries position performs unexpectedly, Ree Automotive 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 Ree Automotive will offset losses from the drop in Ree Automotive's long position.

The idea behind Winnebago Industries and Ree Automotive Holding 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.