Correlation Between CEA Industries and Manitowoc
Can any of the company-specific risk be diversified away by investing in both CEA Industries 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 CEA Industries and Manitowoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEA Industries and Manitowoc, you can compare the effects of market volatilities on CEA Industries 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 CEA Industries with a short position of Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEA Industries and Manitowoc.
Diversification Opportunities for CEA Industries and Manitowoc
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CEA and Manitowoc is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CEA Industries and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc and CEA 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 CEA Industries 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 CEA Industries i.e., CEA Industries and Manitowoc go up and down completely randomly.
Pair Corralation between CEA Industries and Manitowoc
Given the investment horizon of 90 days CEA Industries is expected to generate 1.66 times more return on investment than Manitowoc. However, CEA Industries is 1.66 times more volatile than Manitowoc. It trades about 0.33 of its potential returns per unit of risk. Manitowoc is currently generating about 0.09 per unit of risk. If you would invest 758.00 in CEA Industries on November 27, 2024 and sell it today you would earn a total of 393.00 from holding CEA Industries or generate 51.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEA Industries vs. Manitowoc
Performance |
| Timeline |
| CEA Industries |
| Manitowoc |
CEA Industries and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEA Industries and Manitowoc
The main advantage of trading using opposite CEA Industries and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEA Industries 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.| CEA Industries vs. Rev Group | CEA Industries vs. Caterpillar | CEA Industries vs. Buhler Industries | CEA Industries vs. Austin Engineering Limited |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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