Correlation Between Crane NXT and Gorman Rupp
Can any of the company-specific risk be diversified away by investing in both Crane NXT and Gorman Rupp 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 NXT and Gorman Rupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane NXT Co and Gorman Rupp, you can compare the effects of market volatilities on Crane NXT and Gorman Rupp 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 NXT with a short position of Gorman Rupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and Gorman Rupp.
Diversification Opportunities for Crane NXT and Gorman Rupp
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Crane and Gorman is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Gorman Rupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gorman Rupp and Crane NXT 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 NXT Co are associated (or correlated) with Gorman Rupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gorman Rupp has no effect on the direction of Crane NXT i.e., Crane NXT and Gorman Rupp go up and down completely randomly.
Pair Corralation between Crane NXT and Gorman Rupp
Considering the 90-day investment horizon Crane NXT is expected to generate 1.84 times less return on investment than Gorman Rupp. But when comparing it to its historical volatility, Crane NXT Co is 1.64 times less risky than Gorman Rupp. It trades about 0.18 of its potential returns per unit of risk. Gorman Rupp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,772 in Gorman Rupp on August 24, 2024 and sell it today you would earn a total of 427.00 from holding Gorman Rupp or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane NXT Co vs. Gorman Rupp
Performance |
| Timeline |
| Crane NXT |
| Gorman Rupp |
Crane NXT and Gorman Rupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane NXT and Gorman Rupp
The main advantage of trading using opposite Crane NXT and Gorman Rupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane NXT position performs unexpectedly, Gorman Rupp 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 Gorman Rupp will offset losses from the drop in Gorman Rupp's long position.| Crane NXT vs. Donaldson | Crane NXT vs. ITT Inc | Crane NXT vs. Franklin Electric Co | Crane NXT vs. Enerpac Tool Group |
| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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