Correlation Between Rev and Columbus McKinnon
Can any of the company-specific risk be diversified away by investing in both Rev and Columbus McKinnon 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 Rev and Columbus McKinnon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rev Group and Columbus McKinnon, you can compare the effects of market volatilities on Rev and Columbus McKinnon 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 Rev with a short position of Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rev and Columbus McKinnon.
Diversification Opportunities for Rev and Columbus McKinnon
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rev and Columbus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Rev 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 Rev Group are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Rev i.e., Rev and Columbus McKinnon go up and down completely randomly.
Pair Corralation between Rev and Columbus McKinnon
Given the investment horizon of 90 days Rev Group is expected to generate 0.23 times more return on investment than Columbus McKinnon. However, Rev Group is 4.38 times less risky than Columbus McKinnon. It trades about -0.04 of its potential returns per unit of risk. Columbus McKinnon is currently generating about -0.23 per unit of risk. If you would invest 3,445 in Rev Group on November 18, 2024 and sell it today you would lose (82.00) from holding Rev Group or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rev Group vs. Columbus McKinnon
Performance |
| Timeline |
| Rev Group |
| Columbus McKinnon |
Rev and Columbus McKinnon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rev and Columbus McKinnon
The main advantage of trading using opposite Rev and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rev position performs unexpectedly, Columbus McKinnon 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 Columbus McKinnon will offset losses from the drop in Columbus McKinnon's long position.The idea behind Rev Group and Columbus McKinnon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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