Correlation Between Alamo and Manitowoc
Can any of the company-specific risk be diversified away by investing in both Alamo and Manitowoc 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 Manitowoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Manitowoc, you can compare the effects of market volatilities on Alamo and Manitowoc 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 Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Manitowoc.
Diversification Opportunities for Alamo and Manitowoc
Very weak diversification
The 3 months correlation between Alamo and Manitowoc is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Alamo i.e., Alamo and Manitowoc go up and down completely randomly.
Pair Corralation between Alamo and Manitowoc
Considering the 90-day investment horizon Alamo is expected to generate 5.77 times less return on investment than Manitowoc. But when comparing it to its historical volatility, Alamo Group is 1.73 times less risky than Manitowoc. It trades about 0.06 of its potential returns per unit of risk. Manitowoc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 913.00 in Manitowoc on November 1, 2024 and sell it today you would earn a total of 93.00 from holding Manitowoc or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Manitowoc
Performance |
| Timeline |
| Alamo Group |
| Manitowoc |
Alamo and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Manitowoc
The main advantage of trading using opposite Alamo and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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