Correlation Between Terex and Manitowoc
Can any of the company-specific risk be diversified away by investing in both Terex 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 Terex and Manitowoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and Manitowoc, you can compare the effects of market volatilities on Terex 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 Terex with a short position of Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and Manitowoc.
Diversification Opportunities for Terex and Manitowoc
Poor diversification
The 3 months correlation between Terex and Manitowoc is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc and Terex 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 Terex 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 Terex i.e., Terex and Manitowoc go up and down completely randomly.
Pair Corralation between Terex and Manitowoc
Considering the 90-day investment horizon Terex is expected to under-perform the Manitowoc. But the stock apears to be less risky and, when comparing its historical volatility, Terex is 1.57 times less risky than Manitowoc. The stock trades about -0.02 of its potential returns per unit of risk. The Manitowoc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Manitowoc on August 27, 2024 and sell it today you would earn a total of 76.00 from holding Manitowoc or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terex vs. Manitowoc
Performance |
| Timeline |
| Terex |
| Manitowoc |
Terex and Manitowoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terex and Manitowoc
The main advantage of trading using opposite Terex and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex 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.| Terex vs. Lion Electric Corp | Terex vs. Xos Inc | Terex vs. Hydrofarm Holdings Group | Terex vs. AGCO Corporation |
| 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 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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