Correlation Between Alamo and Columbus McKinnon
Can any of the company-specific risk be diversified away by investing in both Alamo 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 Alamo and Columbus McKinnon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Columbus McKinnon, you can compare the effects of market volatilities on Alamo 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 Alamo with a short position of Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Columbus McKinnon.
Diversification Opportunities for Alamo and Columbus McKinnon
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alamo and Columbus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Alamo 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 Alamo Group 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 Alamo i.e., Alamo and Columbus McKinnon go up and down completely randomly.
Pair Corralation between Alamo and Columbus McKinnon
Considering the 90-day investment horizon Alamo Group is expected to generate 0.12 times more return on investment than Columbus McKinnon. However, Alamo Group is 8.21 times less risky than Columbus McKinnon. It trades about 0.06 of its potential returns per unit of risk. Columbus McKinnon is currently generating about -0.23 per unit of risk. If you would invest 18,235 in Alamo Group on November 18, 2024 and sell it today you would earn a total of 221.00 from holding Alamo Group or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Columbus McKinnon
Performance |
| Timeline |
| Alamo Group |
| Columbus McKinnon |
Alamo and Columbus McKinnon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Columbus McKinnon
The main advantage of trading using opposite Alamo and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo 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.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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