Correlation Between Crane and Xometry
Can any of the company-specific risk be diversified away by investing in both Crane and Xometry 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 Xometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Xometry, you can compare the effects of market volatilities on Crane and Xometry 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 Xometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Xometry.
Diversification Opportunities for Crane and Xometry
Almost no diversification
The 3 months correlation between Crane and Xometry is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry 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 Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Crane i.e., Crane and Xometry go up and down completely randomly.
Pair Corralation between Crane and Xometry
Allowing for the 90-day total investment horizon Crane is expected to generate 2.72 times less return on investment than Xometry. But when comparing it to its historical volatility, Crane Company is 3.13 times less risky than Xometry. It trades about 0.46 of its potential returns per unit of risk. Xometry is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,997 in Xometry on August 27, 2024 and sell it today you would earn a total of 1,274 from holding Xometry or generate 63.8% 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. Xometry
Performance |
| Timeline |
| Crane Company |
| Xometry |
Crane and Xometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Xometry
The main advantage of trading using opposite Crane and Xometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Xometry 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 Xometry will offset losses from the drop in Xometry's long position.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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