Correlation Between WAB and CLO
Can any of the company-specific risk be diversified away by investing in both WAB and CLO 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 WAB and CLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WAB and CLO, you can compare the effects of market volatilities on WAB and CLO 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 WAB with a short position of CLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WAB and CLO.
Diversification Opportunities for WAB and CLO
Good diversification
The 3 months correlation between WAB and CLO is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding WAB and CLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLO and WAB 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 WAB are associated (or correlated) with CLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLO has no effect on the direction of WAB i.e., WAB and CLO go up and down completely randomly.
Pair Corralation between WAB and CLO
If you would invest 0.02 in CLO on February 7, 2024 and sell it today you would earn a total of 0.00 from holding CLO or generate 8.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
WAB vs. CLO
Performance |
Timeline |
WAB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CLO |
WAB and CLO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WAB and CLO
The main advantage of trading using opposite WAB and CLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WAB position performs unexpectedly, CLO 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 CLO will offset losses from the drop in CLO's long position.The idea behind WAB and CLO 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |