Correlation Between Rev and Manitowoc
Can any of the company-specific risk be diversified away by investing in both Rev and Manitowoc 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 Manitowoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rev Group and Manitowoc, you can compare the effects of market volatilities on Rev and Manitowoc 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 Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rev and Manitowoc.
Diversification Opportunities for Rev and Manitowoc
Poor diversification
The 3 months correlation between Rev and Manitowoc is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Rev i.e., Rev and Manitowoc go up and down completely randomly.
Pair Corralation between Rev and Manitowoc
Given the investment horizon of 90 days Rev Group is expected to generate 0.9 times more return on investment than Manitowoc. However, Rev Group is 1.11 times less risky than Manitowoc. It trades about 0.05 of its potential returns per unit of risk. Manitowoc is currently generating about -0.02 per unit of risk. If you would invest 2,565 in Rev Group on August 24, 2024 and sell it today you would earn a total of 417.00 from holding Rev Group or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rev Group vs. Manitowoc
Performance |
| Timeline |
| Rev Group |
| Manitowoc |
Rev and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rev and Manitowoc
The main advantage of trading using opposite Rev and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rev position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.The idea behind Rev Group and Manitowoc 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.| Manitowoc vs. Oshkosh | Manitowoc vs. Alamo Group | Manitowoc vs. Wabash National | Manitowoc vs. Hyster Yale Materials Handling |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |