Correlation Between Crane and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Crane and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Rockwell Automation, you can compare the effects of market volatilities on Crane and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Rockwell Automation.
Diversification Opportunities for Crane and Rockwell Automation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crane and Rockwell is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Crane i.e., Crane and Rockwell Automation go up and down completely randomly.
Pair Corralation between Crane and Rockwell Automation
Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.3 times more return on investment than Rockwell Automation. However, Crane is 1.3 times more volatile than Rockwell Automation. It trades about 0.06 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.02 per unit of risk. If you would invest 10,185 in Crane Company on August 24, 2024 and sell it today you would earn a total of 8,131 from holding Crane Company or generate 79.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Rockwell Automation
Performance |
| Timeline |
| Crane Company |
| Rockwell Automation |
Crane and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Rockwell Automation
The main advantage of trading using opposite Crane and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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