Correlation Between Crane and Astec Industries
Can any of the company-specific risk be diversified away by investing in both Crane and Astec Industries 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 Astec Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Astec Industries, you can compare the effects of market volatilities on Crane and Astec Industries 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 Astec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Astec Industries.
Diversification Opportunities for Crane and Astec Industries
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crane and Astec is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Astec Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astec Industries 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 Astec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astec Industries has no effect on the direction of Crane i.e., Crane and Astec Industries go up and down completely randomly.
Pair Corralation between Crane and Astec Industries
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.84 times more return on investment than Astec Industries. However, Crane Company is 1.19 times less risky than Astec Industries. It trades about 0.09 of its potential returns per unit of risk. Astec Industries is currently generating about 0.01 per unit of risk. If you would invest 11,277 in Crane Company on November 9, 2024 and sell it today you would earn a total of 6,002 from holding Crane Company or generate 53.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Crane Company vs. Astec Industries
Performance |
| Timeline |
| Crane Company |
| Astec Industries |
Crane and Astec Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Astec Industries
The main advantage of trading using opposite Crane and Astec Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Astec Industries 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 Astec Industries will offset losses from the drop in Astec Industries' long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Shyft Group | Astec Industries vs. Rev Group | Astec Industries vs. Lindsay |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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