Correlation Between CSW Industrials and Tennant
Can any of the company-specific risk be diversified away by investing in both CSW Industrials and Tennant 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 Tennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and Tennant Company, you can compare the effects of market volatilities on CSW Industrials and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and Tennant.
Diversification Opportunities for CSW Industrials and Tennant
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSW and Tennant is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of CSW Industrials i.e., CSW Industrials and Tennant go up and down completely randomly.
Pair Corralation between CSW Industrials and Tennant
Given the investment horizon of 90 days CSW Industrials is expected to generate 0.87 times more return on investment than Tennant. However, CSW Industrials is 1.15 times less risky than Tennant. It trades about 0.23 of its potential returns per unit of risk. Tennant Company is currently generating about -0.01 per unit of risk. If you would invest 38,119 in CSW Industrials on August 24, 2024 and sell it today you would earn a total of 4,547 from holding CSW Industrials or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. Tennant Company
Performance |
| Timeline |
| CSW Industrials |
| Tennant Company |
CSW Industrials and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and Tennant
The main advantage of trading using opposite CSW Industrials and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant'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 |
| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant Inc |
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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