Correlation Between John Bean and Graco
Can any of the company-specific risk be diversified away by investing in both John Bean and Graco 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 John Bean and Graco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Graco Inc, you can compare the effects of market volatilities on John Bean and Graco 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 John Bean with a short position of Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Graco.
Diversification Opportunities for John Bean and Graco
Poor diversification
The 3 months correlation between John and Graco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and John Bean 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 John Bean Technologies are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of John Bean i.e., John Bean and Graco go up and down completely randomly.
Pair Corralation between John Bean and Graco
Considering the 90-day investment horizon John Bean is expected to generate 1.26 times less return on investment than Graco. In addition to that, John Bean is 1.52 times more volatile than Graco Inc. It trades about 0.17 of its total potential returns per unit of risk. Graco Inc is currently generating about 0.32 per unit of volatility. If you would invest 8,161 in Graco Inc on August 31, 2024 and sell it today you would earn a total of 895.00 from holding Graco Inc or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Graco Inc
Performance |
| Timeline |
| John Bean Technologies |
| Graco Inc |
John Bean and Graco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Graco
The main advantage of trading using opposite John Bean and Graco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, Graco 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 Graco will offset losses from the drop in Graco's long position.| John Bean vs. Flowserve | John Bean vs. Franklin Electric Co | John Bean vs. Watts Water Technologies | John Bean 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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