Correlation Between Astec Industries and Rev
Can any of the company-specific risk be diversified away by investing in both Astec Industries and Rev 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 Rev into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astec Industries and Rev Group, you can compare the effects of market volatilities on Astec Industries and Rev 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 Rev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Rev.
Diversification Opportunities for Astec Industries and Rev
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astec and Rev is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group 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 Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Astec Industries i.e., Astec Industries and Rev go up and down completely randomly.
Pair Corralation between Astec Industries and Rev
Given the investment horizon of 90 days Astec Industries is expected to generate 3.45 times less return on investment than Rev. But when comparing it to its historical volatility, Astec Industries is 1.13 times less risky than Rev. It trades about 0.04 of its potential returns per unit of risk. Rev Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,286 in Rev Group on August 24, 2024 and sell it today you would earn a total of 1,696 from holding Rev Group or generate 131.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astec Industries vs. Rev Group
Performance |
| Timeline |
| Astec Industries |
| Rev Group |
Astec Industries and Rev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astec Industries and Rev
The main advantage of trading using opposite Astec Industries and Rev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, Rev 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 Rev will offset losses from the drop in Rev's long position.| Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Manitex International | Astec Industries vs. Shyft Group | Astec Industries vs. Rev Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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