Correlation Between Crane and Paychex
Can any of the company-specific risk be diversified away by investing in both Crane and Paychex 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 Paychex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Paychex, you can compare the effects of market volatilities on Crane and Paychex 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 Paychex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Paychex.
Diversification Opportunities for Crane and Paychex
Poor diversification
The 3 months correlation between Crane and Paychex is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex 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 Paychex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paychex has no effect on the direction of Crane i.e., Crane and Paychex go up and down completely randomly.
Pair Corralation between Crane and Paychex
Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.24 times more return on investment than Paychex. However, Crane is 1.24 times more volatile than Paychex. It trades about 0.45 of its potential returns per unit of risk. Paychex is currently generating about 0.12 per unit of risk. If you would invest 15,239 in Crane Company on August 28, 2024 and sell it today you would earn a total of 3,257 from holding Crane Company or generate 21.37% 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. Paychex
Performance |
| Timeline |
| Crane Company |
| Paychex |
Crane and Paychex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Paychex
The main advantage of trading using opposite Crane and Paychex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Paychex 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 Paychex will offset losses from the drop in Paychex's long position.| Crane vs. Aquagold International | Crane vs. Morningstar Unconstrained Allocation | Crane vs. High Yield Municipal Fund | Crane vs. Thrivent High Yield |
| Paychex vs. Robert Half International | Paychex vs. ManpowerGroup | Paychex vs. Upwork Inc | Paychex vs. Insperity |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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