Correlation Between AGCO and Columbus McKinnon
Can any of the company-specific risk be diversified away by investing in both AGCO and Columbus McKinnon 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 AGCO and Columbus McKinnon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and Columbus McKinnon, you can compare the effects of market volatilities on AGCO and Columbus McKinnon 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 AGCO with a short position of Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Columbus McKinnon.
Diversification Opportunities for AGCO and Columbus McKinnon
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between AGCO and Columbus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and AGCO 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 AGCO Corporation are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of AGCO i.e., AGCO and Columbus McKinnon go up and down completely randomly.
Pair Corralation between AGCO and Columbus McKinnon
Given the investment horizon of 90 days AGCO Corporation is expected to generate 1.17 times more return on investment than Columbus McKinnon. However, AGCO is 1.17 times more volatile than Columbus McKinnon. It trades about 0.31 of its potential returns per unit of risk. Columbus McKinnon is currently generating about -0.04 per unit of risk. If you would invest 9,363 in AGCO Corporation on October 26, 2024 and sell it today you would earn a total of 1,084 from holding AGCO Corporation or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGCO Corp. vs. Columbus McKinnon
Performance |
| Timeline |
| AGCO |
| Columbus McKinnon |
AGCO and Columbus McKinnon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGCO and Columbus McKinnon
The main advantage of trading using opposite AGCO and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO position performs unexpectedly, Columbus McKinnon 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 Columbus McKinnon will offset losses from the drop in Columbus McKinnon's long position.The idea behind AGCO Corporation and Columbus McKinnon 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.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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