Correlation Between Crane and Wilhelmina
Can any of the company-specific risk be diversified away by investing in both Crane and Wilhelmina 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 Wilhelmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Wilhelmina, you can compare the effects of market volatilities on Crane and Wilhelmina 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 Wilhelmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Wilhelmina.
Diversification Opportunities for Crane and Wilhelmina
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crane and Wilhelmina is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina 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 Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of Crane i.e., Crane and Wilhelmina go up and down completely randomly.
Pair Corralation between Crane and Wilhelmina
Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.4 times more return on investment than Wilhelmina. However, Crane Company is 2.51 times less risky than Wilhelmina. It trades about 0.12 of its potential returns per unit of risk. Wilhelmina is currently generating about 0.01 per unit of risk. If you would invest 12,123 in Crane Company on August 27, 2024 and sell it today you would earn a total of 6,313 from holding Crane Company or generate 52.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Wilhelmina
Performance |
| Timeline |
| Crane Company |
| Wilhelmina |
Crane and Wilhelmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Wilhelmina
The main advantage of trading using opposite Crane and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Wilhelmina 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 Wilhelmina will offset losses from the drop in Wilhelmina's long position.| Crane vs. Aquagold International | Crane vs. Morningstar Unconstrained Allocation | Crane vs. High Yield Municipal Fund | Crane vs. Thrivent High Yield |
| Wilhelmina vs. Performant Financial | Wilhelmina vs. Network 1 Technologies | Wilhelmina vs. Rentokil Initial PLC | Wilhelmina vs. Mader Group Limited |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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