Correlation Between WAB and Shrapnel

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

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

Diversification Opportunities for WAB and Shrapnel

0.0

Correlation Coefficient

WAB  Shrapnel

Pay attention - limited upside

The 3 months correlation between WAB and Shrapnel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WAB and Shrapnel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shrapnel 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 Shrapnel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shrapnel has no effect on the direction of WAB i.e., WAB and Shrapnel go up and down completely randomly.

Pair Corralation between WAB and Shrapnel

If you would invest  0.03  in WAB on February 7, 2024 and sell it today you would earn a total of  0.00  from holding WAB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

WAB  vs.  Shrapnel

WAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, WAB is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Shrapnel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shrapnel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Shrapnel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WAB and Shrapnel

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

The idea behind WAB and Shrapnel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.