Correlation Between Columbus McKinnon and Volvo AB
Can any of the company-specific risk be diversified away by investing in both Columbus McKinnon and Volvo AB 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 Columbus McKinnon and Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbus McKinnon and Volvo AB ADR, you can compare the effects of market volatilities on Columbus McKinnon and Volvo AB 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 Columbus McKinnon with a short position of Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbus McKinnon and Volvo AB.
Diversification Opportunities for Columbus McKinnon and Volvo AB
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Columbus and Volvo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Columbus McKinnon and Volvo AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ADR and Columbus McKinnon 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 Columbus McKinnon are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ADR has no effect on the direction of Columbus McKinnon i.e., Columbus McKinnon and Volvo AB go up and down completely randomly.
Pair Corralation between Columbus McKinnon and Volvo AB
Given the investment horizon of 90 days Columbus McKinnon is expected to generate 13.28 times less return on investment than Volvo AB. In addition to that, Columbus McKinnon is 1.2 times more volatile than Volvo AB ADR. It trades about 0.0 of its total potential returns per unit of risk. Volvo AB ADR is currently generating about 0.06 per unit of volatility. If you would invest 1,849 in Volvo AB ADR on August 31, 2024 and sell it today you would earn a total of 629.00 from holding Volvo AB ADR or generate 34.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbus McKinnon vs. Volvo AB ADR
Performance |
| Timeline |
| Columbus McKinnon |
| Volvo AB ADR |
Columbus McKinnon and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbus McKinnon and Volvo AB
The main advantage of trading using opposite Columbus McKinnon and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbus McKinnon position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
| Volvo AB vs. AB Volvo | Volvo AB vs. Deere Company | Volvo AB vs. Hino Motors Ltd | Volvo AB vs. Daimler Truck Holding |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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