Correlation Between Crane and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Crane and Chart 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 Chart 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 Chart Industries, you can compare the effects of market volatilities on Crane and Chart 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 Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Chart Industries.
Diversification Opportunities for Crane and Chart Industries
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crane and Chart is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Crane i.e., Crane and Chart Industries go up and down completely randomly.
Pair Corralation between Crane and Chart Industries
Allowing for the 90-day total investment horizon Crane is expected to generate 1.8 times less return on investment than Chart Industries. But when comparing it to its historical volatility, Crane Company is 1.51 times less risky than Chart Industries. It trades about 0.46 of its potential returns per unit of risk. Chart Industries is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 5,098 in Chart Industries on August 28, 2024 and sell it today you would earn a total of 2,093 from holding Chart Industries or generate 41.06% 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. Chart Industries
Performance |
| Timeline |
| Crane Company |
| Chart Industries |
Crane and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Chart Industries
The main advantage of trading using opposite Crane and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Chart 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 Chart Industries will offset losses from the drop in Chart Industries' long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Chart Industries vs. Babcock Wilcox Enterprises | Chart Industries vs. Morgan Stanley | Chart Industries vs. National Storage Affiliates | Chart Industries vs. Aquagold International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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