Correlation Between Crane and AZZ Incorporated
Can any of the company-specific risk be diversified away by investing in both Crane and AZZ Incorporated 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 AZZ Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and AZZ Incorporated, you can compare the effects of market volatilities on Crane and AZZ Incorporated 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 AZZ Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and AZZ Incorporated.
Diversification Opportunities for Crane and AZZ Incorporated
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crane and AZZ is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and AZZ Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AZZ Incorporated 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 AZZ Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AZZ Incorporated has no effect on the direction of Crane i.e., Crane and AZZ Incorporated go up and down completely randomly.
Pair Corralation between Crane and AZZ Incorporated
Allowing for the 90-day total investment horizon Crane is expected to generate 1.22 times less return on investment than AZZ Incorporated. But when comparing it to its historical volatility, Crane Company is 1.1 times less risky than AZZ Incorporated. It trades about 0.09 of its potential returns per unit of risk. AZZ Incorporated is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,703 in AZZ Incorporated on November 9, 2024 and sell it today you would earn a total of 3,852 from holding AZZ Incorporated or generate 67.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Crane Company vs. AZZ Incorporated
Performance |
| Timeline |
| Crane Company |
| AZZ Incorporated |
Crane and AZZ Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and AZZ Incorporated
The main advantage of trading using opposite Crane and AZZ Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, AZZ Incorporated 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 AZZ Incorporated will offset losses from the drop in AZZ Incorporated's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| AZZ Incorporated vs. Maximus | AZZ Incorporated vs. ABM Industries Incorporated | AZZ Incorporated vs. CBIZ Inc | AZZ Incorporated vs. Cass Information Systems |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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