Correlation Between Wabash National and Data IO

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

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

Diversification Opportunities for Wabash National and Data IO

0.7

Correlation Coefficient

Wabash National  Data IO

Poor diversification

The 3 months correlation between Wabash and Data is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Data IO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data IO 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 Data IO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data IO has no effect on the direction of Wabash National i.e., Wabash National and Data IO go up and down completely randomly.

Pair Corralation between Wabash National and Data IO

Considering the 90-day investment horizon Wabash National is expected to under-perform the Data IO. But the stock apears to be less risky and, when comparing its historical volatility, Wabash National is 1.08 times less risky than Data IO. The stock trades about -0.05 of its potential returns per unit of risk. The Data IO is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  337.00  in Data IO on September 12, 2025 and sell it today you would lose (24.00) from holding Data IO or give up 7.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Wabash National  vs.  Data IO

Wabash National

Risk-Adjusted Performance

Weakest

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 abnormal 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.

Data IO

Risk-Adjusted Performance

Weakest

Over the last 90 days Data IO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Data IO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wabash National and Data IO

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

The idea behind Wabash National and Data IO 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.