Correlation Between Rev and Terex
Can any of the company-specific risk be diversified away by investing in both Rev and Terex 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 Terex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rev Group and Terex, you can compare the effects of market volatilities on Rev and Terex 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 Terex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rev and Terex.
Diversification Opportunities for Rev and Terex
Very good diversification
The 3 months correlation between Rev and Terex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex 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 Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Rev i.e., Rev and Terex go up and down completely randomly.
Pair Corralation between Rev and Terex
Given the investment horizon of 90 days Rev is expected to generate 1.16 times less return on investment than Terex. In addition to that, Rev is 1.27 times more volatile than Terex. It trades about 0.19 of its total potential returns per unit of risk. Terex is currently generating about 0.28 per unit of volatility. If you would invest 4,452 in Terex on November 2, 2024 and sell it today you would earn a total of 445.00 from holding Terex or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rev Group vs. Terex
Performance |
| Timeline |
| Rev Group |
| Terex |
Rev and Terex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rev and Terex
The main advantage of trading using opposite Rev and Terex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rev position performs unexpectedly, Terex 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 Terex will offset losses from the drop in Terex's long position.The idea behind Rev Group and Terex 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.| Terex vs. Oshkosh | Terex vs. Astec Industries | Terex vs. Hyster Yale Materials Handling | Terex 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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