Correlation Between Lindsay and Astec Industries
Can any of the company-specific risk be diversified away by investing in both Lindsay and Astec Industries 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 Lindsay and Astec Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindsay and Astec Industries, you can compare the effects of market volatilities on Lindsay and Astec Industries 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 Lindsay with a short position of Astec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsay and Astec Industries.
Diversification Opportunities for Lindsay and Astec Industries
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindsay and Astec is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and Astec Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astec Industries and Lindsay 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 Lindsay are associated (or correlated) with Astec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astec Industries has no effect on the direction of Lindsay i.e., Lindsay and Astec Industries go up and down completely randomly.
Pair Corralation between Lindsay and Astec Industries
Considering the 90-day investment horizon Lindsay is expected to generate 1.04 times more return on investment than Astec Industries. However, Lindsay is 1.04 times more volatile than Astec Industries. It trades about 0.06 of its potential returns per unit of risk. Astec Industries is currently generating about 0.05 per unit of risk. If you would invest 11,182 in Lindsay on August 24, 2024 and sell it today you would earn a total of 1,890 from holding Lindsay or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsay vs. Astec Industries
Performance |
| Timeline |
| Lindsay |
| Astec Industries |
Lindsay and Astec Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsay and Astec Industries
The main advantage of trading using opposite Lindsay and Astec Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsay position performs unexpectedly, Astec Industries 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 Astec Industries will offset losses from the drop in Astec Industries' long position.| Lindsay vs. Columbus McKinnon | Lindsay vs. Astec Industries | Lindsay vs. Shyft Group | Lindsay vs. AGCO Corporation |
| Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Manitex International | Astec Industries vs. Shyft Group | Astec Industries vs. Rev 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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