Correlation Between Crane and Barrett Business
Can any of the company-specific risk be diversified away by investing in both Crane and Barrett Business 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 Barrett Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Barrett Business Services, you can compare the effects of market volatilities on Crane and Barrett Business 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 Barrett Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Barrett Business.
Diversification Opportunities for Crane and Barrett Business
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crane and Barrett is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services 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 Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Crane i.e., Crane and Barrett Business go up and down completely randomly.
Pair Corralation between Crane and Barrett Business
Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.17 times more return on investment than Barrett Business. However, Crane is 1.17 times more volatile than Barrett Business Services. It trades about 0.17 of its potential returns per unit of risk. Barrett Business Services is currently generating about 0.19 per unit of risk. If you would invest 15,828 in Crane Company on August 31, 2024 and sell it today you would earn a total of 2,332 from holding Crane Company or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Barrett Business Services
Performance |
| Timeline |
| Crane Company |
| Barrett Business Services |
Crane and Barrett Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Barrett Business
The main advantage of trading using opposite Crane and Barrett Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Barrett Business 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 Barrett Business will offset losses from the drop in Barrett Business' long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Barrett Business vs. Korn Ferry | Barrett Business vs. Kelly Services A | Barrett Business vs. Kforce Inc | Barrett Business vs. Hudson Global |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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