Correlation Between Wabash National and Thor Industries

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

By analyzing existing cross correlation between Wabash National and Thor Industries, you can compare the effects of market volatilities on Wabash National and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Thor Industries.

Diversification Opportunities for Wabash National and Thor Industries

0.49

Correlation Coefficient

Wabash National  Thor Industries

Very weak diversification

The 3 months correlation between Wabash and Thor is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Wabash National i.e., Wabash National and Thor Industries go up and down completely randomly.

Pair Corralation between Wabash National and Thor Industries

Considering the 90-day investment horizon Wabash National is expected to under-perform the Thor Industries. In addition to that, Wabash National is 1.12 times more volatile than Thor Industries. It trades about -0.07 of its total potential returns per unit of risk. Thor Industries is currently generating about -0.08 per unit of volatility. If you would invest  10,894  in Thor Industries on September 24, 2024 and sell it today you would lose (1,168) from holding Thor Industries or give up 10.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Wabash National  vs.  Thor Industries

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Thor Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Wabash National and Thor Industries

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

The idea behind Wabash National and Thor Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.