Correlation Between Crane and Aspen Aerogels
Can any of the company-specific risk be diversified away by investing in both Crane and Aspen Aerogels 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 Crane and Aspen Aerogels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Aspen Aerogels, you can compare the effects of market volatilities on Crane and Aspen Aerogels 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 Crane with a short position of Aspen Aerogels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Aspen Aerogels.
Diversification Opportunities for Crane and Aspen Aerogels
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crane and Aspen is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Aspen Aerogels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Aerogels and Crane 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 Crane Company are associated (or correlated) with Aspen Aerogels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Aerogels has no effect on the direction of Crane i.e., Crane and Aspen Aerogels go up and down completely randomly.
Pair Corralation between Crane and Aspen Aerogels
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.6 times more return on investment than Aspen Aerogels. However, Crane Company is 1.68 times less risky than Aspen Aerogels. It trades about 0.45 of its potential returns per unit of risk. Aspen Aerogels is currently generating about -0.4 per unit of risk. If you would invest 15,239 in Crane Company on August 27, 2024 and sell it today you would earn a total of 3,197 from holding Crane Company or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Aspen Aerogels
Performance |
| Timeline |
| Crane Company |
| Aspen Aerogels |
Crane and Aspen Aerogels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Aspen Aerogels
The main advantage of trading using opposite Crane and Aspen Aerogels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Aspen Aerogels 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 Aspen Aerogels will offset losses from the drop in Aspen Aerogels' long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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