Correlation Between Crane and Broadwind Energy
Can any of the company-specific risk be diversified away by investing in both Crane and Broadwind Energy 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 Broadwind Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Broadwind Energy, you can compare the effects of market volatilities on Crane and Broadwind Energy 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 Broadwind Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Broadwind Energy.
Diversification Opportunities for Crane and Broadwind Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Crane and Broadwind is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Broadwind Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind Energy 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 Broadwind Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind Energy has no effect on the direction of Crane i.e., Crane and Broadwind Energy go up and down completely randomly.
Pair Corralation between Crane and Broadwind Energy
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.47 times more return on investment than Broadwind Energy. However, Crane Company is 2.11 times less risky than Broadwind Energy. It trades about 0.41 of its potential returns per unit of risk. Broadwind Energy is currently generating about -0.27 per unit of risk. If you would invest 15,180 in Crane Company on August 24, 2024 and sell it today you would earn a total of 3,136 from holding Crane Company or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Crane Company vs. Broadwind Energy
Performance |
| Timeline |
| Crane Company |
| Broadwind Energy |
Crane and Broadwind Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Broadwind Energy
The main advantage of trading using opposite Crane and Broadwind Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Broadwind Energy 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 Broadwind Energy will offset losses from the drop in Broadwind Energy's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Broadwind Energy vs. Thermon Group Holdings | Broadwind Energy vs. Enpro Industries | Broadwind Energy vs. Gates Industrial | Broadwind Energy vs. Watts Water Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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