Correlation Between Dana and Wallbox NV

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

By analyzing existing cross correlation between Dana Inc and Wallbox NV, you can compare the effects of market volatilities on Dana and Wallbox NV 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 Dana with a short position of Wallbox NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Wallbox NV.

Diversification Opportunities for Dana and Wallbox NV

0.46

Correlation Coefficient

Dana  Wallbox NV

Very weak diversification

The 3 months correlation between Dana and Wallbox is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Wallbox NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV and Dana 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 Dana Inc are associated (or correlated) with Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV has no effect on the direction of Dana i.e., Dana and Wallbox NV go up and down completely randomly.

Pair Corralation between Dana and Wallbox NV

Considering the 90-day investment horizon Dana Inc is expected to generate 0.44 times more return on investment than Wallbox NV. However, Dana Inc is 2.28 times less risky than Wallbox NV. It trades about 0.01 of its potential returns per unit of risk. Wallbox NV is currently generating about -0.04 per unit of risk. If you would invest  1,320  in Dana Inc on February 6, 2024 and sell it today you would earn a total of  11.00  from holding Dana Inc or generate 0.83% return on investment over 90 days.

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

Dana Inc  vs.  Wallbox NV

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wallbox NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Wallbox NV is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dana and Wallbox NV

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

The idea behind Dana Inc and Wallbox NV 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.