Correlation Between Gorman Rupp and Cummins
Can any of the company-specific risk be diversified away by investing in both Gorman Rupp and Cummins 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 Gorman Rupp and Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gorman Rupp and Cummins, you can compare the effects of market volatilities on Gorman Rupp and Cummins 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 Gorman Rupp with a short position of Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gorman Rupp and Cummins.
Diversification Opportunities for Gorman Rupp and Cummins
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gorman and Cummins is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins and Gorman Rupp 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 Gorman Rupp are associated (or correlated) with Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Gorman Rupp i.e., Gorman Rupp and Cummins go up and down completely randomly.
Pair Corralation between Gorman Rupp and Cummins
Considering the 90-day investment horizon Gorman Rupp is expected to generate 1.26 times less return on investment than Cummins. In addition to that, Gorman Rupp is 1.18 times more volatile than Cummins. It trades about 0.17 of its total potential returns per unit of risk. Cummins is currently generating about 0.26 per unit of volatility. If you would invest 33,020 in Cummins on August 31, 2024 and sell it today you would earn a total of 4,083 from holding Cummins or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gorman Rupp vs. Cummins
Performance |
| Timeline |
| Gorman Rupp |
| Cummins |
Gorman Rupp and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gorman Rupp and Cummins
The main advantage of trading using opposite Gorman Rupp and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gorman Rupp position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
| Cummins vs. Flowserve | Cummins vs. Franklin Electric Co | Cummins vs. Watts Water Technologies | Cummins vs. Gorman Rupp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |