Correlation Between Omega Flex and Crane
Can any of the company-specific risk be diversified away by investing in both Omega Flex and Crane 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 Omega Flex and Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Flex and Crane Company, you can compare the effects of market volatilities on Omega Flex and Crane 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 Omega Flex with a short position of Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Flex and Crane.
Diversification Opportunities for Omega Flex and Crane
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Omega and Crane is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and Omega Flex 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 Omega Flex are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Omega Flex i.e., Omega Flex and Crane go up and down completely randomly.
Pair Corralation between Omega Flex and Crane
Given the investment horizon of 90 days Omega Flex is expected to under-perform the Crane. But the stock apears to be less risky and, when comparing its historical volatility, Omega Flex is 1.31 times less risky than Crane. The stock trades about -0.07 of its potential returns per unit of risk. The Crane Company is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 15,098 in Crane Company on November 3, 2024 and sell it today you would earn a total of 1,934 from holding Crane Company or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Flex vs. Crane Company
Performance |
| Timeline |
| Omega Flex |
| Crane Company |
Omega Flex and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Flex and Crane
The main advantage of trading using opposite Omega Flex and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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