Correlation Between Crane and Mueller Water
Can any of the company-specific risk be diversified away by investing in both Crane and Mueller Water 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 Mueller Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Mueller Water Products, you can compare the effects of market volatilities on Crane and Mueller Water 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 Mueller Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Mueller Water.
Diversification Opportunities for Crane and Mueller Water
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crane and Mueller is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Mueller Water Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Water Products 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 Mueller Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Water Products has no effect on the direction of Crane i.e., Crane and Mueller Water go up and down completely randomly.
Pair Corralation between Crane and Mueller Water
Allowing for the 90-day total investment horizon Crane is expected to generate 1.18 times less return on investment than Mueller Water. In addition to that, Crane is 1.34 times more volatile than Mueller Water Products. It trades about 0.06 of its total potential returns per unit of risk. Mueller Water Products is currently generating about 0.1 per unit of volatility. If you would invest 1,102 in Mueller Water Products on August 27, 2024 and sell it today you would earn a total of 1,416 from holding Mueller Water Products or generate 128.49% 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. Mueller Water Products
Performance |
| Timeline |
| Crane Company |
| Mueller Water Products |
Crane and Mueller Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Mueller Water
The main advantage of trading using opposite Crane and Mueller Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Mueller Water 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 Mueller Water will offset losses from the drop in Mueller Water's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Mueller Water vs. Enerpac Tool Group | Mueller Water vs. Luxfer Holdings PLC | Mueller Water vs. John Bean Technologies | Mueller Water vs. CSW Industrials |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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