Correlation Between Columbus McKinnon and Water Ways
Can any of the company-specific risk be diversified away by investing in both Columbus McKinnon and Water Ways 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 Water Ways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbus McKinnon and Water Ways Technologies, you can compare the effects of market volatilities on Columbus McKinnon and Water Ways 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 Water Ways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbus McKinnon and Water Ways.
Diversification Opportunities for Columbus McKinnon and Water Ways
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Columbus and Water is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Columbus McKinnon and Water Ways Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Water Ways Technologies 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 Water Ways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Water Ways Technologies has no effect on the direction of Columbus McKinnon i.e., Columbus McKinnon and Water Ways go up and down completely randomly.
Pair Corralation between Columbus McKinnon and Water Ways
Given the investment horizon of 90 days Columbus McKinnon is expected to generate 50.76 times less return on investment than Water Ways. But when comparing it to its historical volatility, Columbus McKinnon is 52.81 times less risky than Water Ways. It trades about 0.14 of its potential returns per unit of risk. Water Ways Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Water Ways Technologies on August 28, 2024 and sell it today you would earn a total of 19.20 from holding Water Ways Technologies or generate 2400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbus McKinnon vs. Water Ways Technologies
Performance |
| Timeline |
| Columbus McKinnon |
| Water Ways Technologies |
Columbus McKinnon and Water Ways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbus McKinnon and Water Ways
The main advantage of trading using opposite Columbus McKinnon and Water Ways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbus McKinnon position performs unexpectedly, Water Ways 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 Water Ways will offset losses from the drop in Water Ways' long position.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
| Water Ways vs. Alamo Group | Water Ways vs. Hyster Yale Materials Handling | Water Ways vs. Columbus McKinnon | Water Ways vs. AGCO Corporation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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