Correlation Between Shyft and Rev
Can any of the company-specific risk be diversified away by investing in both Shyft and Rev 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 Shyft and Rev into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shyft Group and Rev Group, you can compare the effects of market volatilities on Shyft and Rev 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 Shyft with a short position of Rev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyft and Rev.
Diversification Opportunities for Shyft and Rev
Poor diversification
The 3 months correlation between Shyft and Rev is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shyft Group and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group and Shyft 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 Shyft Group are associated (or correlated) with Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Shyft i.e., Shyft and Rev go up and down completely randomly.
Pair Corralation between Shyft and Rev
Given the investment horizon of 90 days Shyft Group is expected to generate 1.17 times more return on investment than Rev. However, Shyft is 1.17 times more volatile than Rev Group. It trades about 0.22 of its potential returns per unit of risk. Rev Group is currently generating about 0.2 per unit of risk. If you would invest 1,170 in Shyft Group on August 24, 2024 and sell it today you would earn a total of 164.00 from holding Shyft Group or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shyft Group vs. Rev Group
Performance |
| Timeline |
| Shyft Group |
| Rev Group |
Shyft and Rev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shyft and Rev
The main advantage of trading using opposite Shyft and Rev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft position performs unexpectedly, Rev 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 Rev will offset losses from the drop in Rev's long position.| Shyft vs. Astec Industries | Shyft vs. Hyster Yale Materials Handling | Shyft vs. Manitex International | Shyft vs. Rev Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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