Correlation Between Manitowoc and Link Reservations
Can any of the company-specific risk be diversified away by investing in both Manitowoc and Link Reservations 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 Link Reservations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manitowoc and Link Reservations, you can compare the effects of market volatilities on Manitowoc and Link Reservations 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 Link Reservations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitowoc and Link Reservations.
Diversification Opportunities for Manitowoc and Link Reservations
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Manitowoc and Link is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Manitowoc and Link Reservations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Reservations 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 Link Reservations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Reservations has no effect on the direction of Manitowoc i.e., Manitowoc and Link Reservations go up and down completely randomly.
Pair Corralation between Manitowoc and Link Reservations
Considering the 90-day investment horizon Manitowoc is expected to generate 3.94 times less return on investment than Link Reservations. But when comparing it to its historical volatility, Manitowoc is 6.31 times less risky than Link Reservations. It trades about 0.07 of its potential returns per unit of risk. Link Reservations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Link Reservations on August 30, 2024 and sell it today you would lose (0.10) from holding Link Reservations or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manitowoc vs. Link Reservations
Performance |
| Timeline |
| Manitowoc |
| Link Reservations |
Manitowoc and Link Reservations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manitowoc and Link Reservations
The main advantage of trading using opposite Manitowoc and Link Reservations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manitowoc position performs unexpectedly, Link Reservations 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 Link Reservations will offset losses from the drop in Link Reservations' long position.| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
| Link Reservations vs. Deere Company | Link Reservations vs. Columbus McKinnon | Link Reservations vs. Hyster Yale Materials Handling | Link Reservations vs. Manitowoc |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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