Correlation Between Wabash National and Holdco Nuvo

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

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

Diversification Opportunities for Wabash National and Holdco Nuvo

-0.14

Correlation Coefficient

Wabash National  Holdco Nuvo

Good diversification

The 3 months correlation between Wabash and Holdco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Holdco Nuvo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holdco Nuvo Group and Wabash National 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 Wabash National are associated (or correlated) with Holdco Nuvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holdco Nuvo Group has no effect on the direction of Wabash National i.e., Wabash National and Holdco Nuvo go up and down completely randomly.

Pair Corralation between Wabash National and Holdco Nuvo

Considering the 90-day investment horizon Wabash National is expected to under-perform the Holdco Nuvo. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 9.57 times less risky than Holdco Nuvo. The stock trades about 0.0 of its potential returns per unit of risk. The Holdco Nuvo Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,025  in Holdco Nuvo Group on September 14, 2024 and sell it today you would lose (1,024) from holding Holdco Nuvo Group or give up 99.94% of portfolio value over 90 days.

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

Wabash National  vs.  Holdco Nuvo Group

Wabash National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wabash National are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Wabash National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Holdco Nuvo Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holdco Nuvo Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Holdco Nuvo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wabash National and Holdco Nuvo

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

The idea behind Wabash National and Holdco Nuvo Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.