Correlation Between Crane and Graham
Can any of the company-specific risk be diversified away by investing in both Crane and Graham 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 Graham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Graham, you can compare the effects of market volatilities on Crane and Graham 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 Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Graham.
Diversification Opportunities for Crane and Graham
Average diversification
The 3 months correlation between Crane and Graham is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Graham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham 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 Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham has no effect on the direction of Crane i.e., Crane and Graham go up and down completely randomly.
Pair Corralation between Crane and Graham
Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.01 times more return on investment than Graham. However, Crane is 1.01 times more volatile than Graham. It trades about 0.19 of its potential returns per unit of risk. Graham is currently generating about 0.06 per unit of risk. If you would invest 15,098 in Crane Company on November 3, 2024 and sell it today you would earn a total of 1,934 from holding Crane Company or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Graham
Performance |
| Timeline |
| Crane Company |
| Graham |
Crane and Graham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Graham
The main advantage of trading using opposite Crane and Graham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Graham 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 Graham will offset losses from the drop in Graham's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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