Correlation Between Astec Industries and Arts Way
Can any of the company-specific risk be diversified away by investing in both Astec Industries and Arts Way 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 Astec Industries and Arts Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astec Industries and Arts Way Manufacturing Co, you can compare the effects of market volatilities on Astec Industries and Arts Way 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 Astec Industries with a short position of Arts Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Arts Way.
Diversification Opportunities for Astec Industries and Arts Way
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astec and Arts is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and Astec Industries 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 Astec Industries are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of Astec Industries i.e., Astec Industries and Arts Way go up and down completely randomly.
Pair Corralation between Astec Industries and Arts Way
Given the investment horizon of 90 days Astec Industries is expected to generate 226.1 times less return on investment than Arts Way. But when comparing it to its historical volatility, Astec Industries is 19.61 times less risky than Arts Way. It trades about 0.0 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 258.00 in Arts Way Manufacturing Co on August 31, 2024 and sell it today you would lose (88.00) from holding Arts Way Manufacturing Co or give up 34.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astec Industries vs. Arts Way Manufacturing Co
Performance |
| Timeline |
| Astec Industries |
| Arts Way Manufacturing |
Astec Industries and Arts Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astec Industries and Arts Way
The main advantage of trading using opposite Astec Industries and Arts Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, Arts Way 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 Arts Way will offset losses from the drop in Arts Way's long position.| Astec Industries vs. Deere Company | Astec Industries vs. Lindsay | Astec Industries vs. Alamo Group | Astec Industries vs. Manitowoc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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