Correlation Between Manitowoc and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both Manitowoc and Gencor 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 Manitowoc and Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manitowoc and Gencor Industries, you can compare the effects of market volatilities on Manitowoc and Gencor 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 Manitowoc with a short position of Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitowoc and Gencor Industries.
Diversification Opportunities for Manitowoc and Gencor Industries
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manitowoc and Gencor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Manitowoc and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and Manitowoc 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 Manitowoc are associated (or correlated) with Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of Manitowoc i.e., Manitowoc and Gencor Industries go up and down completely randomly.
Pair Corralation between Manitowoc and Gencor Industries
Considering the 90-day investment horizon Manitowoc is expected to generate 2.25 times less return on investment than Gencor Industries. In addition to that, Manitowoc is 1.36 times more volatile than Gencor Industries. It trades about 0.02 of its total potential returns per unit of risk. Gencor Industries is currently generating about 0.07 per unit of volatility. If you would invest 1,100 in Gencor Industries on August 27, 2024 and sell it today you would earn a total of 1,134 from holding Gencor Industries or generate 103.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manitowoc vs. Gencor Industries
Performance |
| Timeline |
| Manitowoc |
| Gencor Industries |
Manitowoc and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manitowoc and Gencor Industries
The main advantage of trading using opposite Manitowoc and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manitowoc position performs unexpectedly, Gencor 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
| Gencor Industries vs. Alamo Group | Gencor Industries vs. Manitowoc | Gencor Industries vs. Manitex International | Gencor Industries vs. Columbus McKinnon |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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