Correlation Between Crane NXT and IDEX
Can any of the company-specific risk be diversified away by investing in both Crane NXT and IDEX 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 IDEX 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 IDEX Corporation, you can compare the effects of market volatilities on Crane NXT and IDEX 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 IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and IDEX.
Diversification Opportunities for Crane NXT and IDEX
Very poor diversification
The 3 months correlation between Crane and IDEX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX 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 IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Crane NXT i.e., Crane NXT and IDEX go up and down completely randomly.
Pair Corralation between Crane NXT and IDEX
Considering the 90-day investment horizon Crane NXT Co is expected to generate 1.32 times more return on investment than IDEX. However, Crane NXT is 1.32 times more volatile than IDEX Corporation. It trades about -0.02 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.04 per unit of risk. If you would invest 5,802 in Crane NXT Co on January 10, 2025 and sell it today you would lose (1,300) from holding Crane NXT Co or give up 22.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane NXT Co vs. IDEX Corp.
Performance |
| Timeline |
| Crane NXT |
| IDEX |
Crane NXT and IDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane NXT and IDEX
The main advantage of trading using opposite Crane NXT and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane NXT position performs unexpectedly, IDEX 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 IDEX will offset losses from the drop in IDEX's long position.| Crane NXT vs. Donaldson | Crane NXT vs. ITT Inc | Crane NXT vs. Franklin Electric Co | Crane NXT vs. Enerpac Tool Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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