Correlation Between CSW Industrials and John Bean
Can any of the company-specific risk be diversified away by investing in both CSW Industrials and John Bean 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 CSW Industrials and John Bean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and John Bean Technologies, you can compare the effects of market volatilities on CSW Industrials and John Bean 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 CSW Industrials with a short position of John Bean. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and John Bean.
Diversification Opportunities for CSW Industrials and John Bean
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CSW and John is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies and CSW Industrials 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 CSW Industrials are associated (or correlated) with John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of CSW Industrials i.e., CSW Industrials and John Bean go up and down completely randomly.
Pair Corralation between CSW Industrials and John Bean
Given the investment horizon of 90 days CSW Industrials is expected to generate 0.87 times more return on investment than John Bean. However, CSW Industrials is 1.15 times less risky than John Bean. It trades about 0.14 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.03 per unit of risk. If you would invest 12,106 in CSW Industrials on August 23, 2024 and sell it today you would earn a total of 29,097 from holding CSW Industrials or generate 240.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. John Bean Technologies
Performance |
| Timeline |
| CSW Industrials |
| John Bean Technologies |
CSW Industrials and John Bean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and John Bean
The main advantage of trading using opposite CSW Industrials and John Bean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials position performs unexpectedly, John Bean 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 John Bean will offset losses from the drop in John Bean's long position.| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT Inc |
| John Bean vs. Small Cap Core | John Bean vs. Freedom Holding Corp | John Bean vs. Gfl Environmental Holdings | John Bean vs. Growth Fund Of |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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