Correlation Between Crane and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Crane and Enpro 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 Enpro 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 Enpro Industries, you can compare the effects of market volatilities on Crane and Enpro 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 Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Enpro Industries.
Diversification Opportunities for Crane and Enpro Industries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crane and Enpro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro 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 Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Crane i.e., Crane and Enpro Industries go up and down completely randomly.
Pair Corralation between Crane and Enpro Industries
Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.16 times more return on investment than Enpro Industries. However, Crane is 1.16 times more volatile than Enpro Industries. It trades about 0.06 of its potential returns per unit of risk. Enpro Industries is currently generating about 0.05 per unit of risk. If you would invest 10,530 in Crane Company on August 23, 2024 and sell it today you would earn a total of 7,786 from holding Crane Company or generate 73.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Enpro Industries
Performance |
| Timeline |
| Crane Company |
| Enpro Industries |
Crane and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Enpro Industries
The main advantage of trading using opposite Crane and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Enpro 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 Enpro Industries will offset losses from the drop in Enpro Industries' long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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