Correlation Between Terex and Oshkosh
Can any of the company-specific risk be diversified away by investing in both Terex and Oshkosh 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 Oshkosh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and Oshkosh, you can compare the effects of market volatilities on Terex and Oshkosh 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 Oshkosh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and Oshkosh.
Diversification Opportunities for Terex and Oshkosh
Poor diversification
The 3 months correlation between Terex and Oshkosh is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh 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 Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of Terex i.e., Terex and Oshkosh go up and down completely randomly.
Pair Corralation between Terex and Oshkosh
Considering the 90-day investment horizon Terex is expected to under-perform the Oshkosh. But the stock apears to be less risky and, when comparing its historical volatility, Terex is 1.94 times less risky than Oshkosh. The stock trades about -0.07 of its potential returns per unit of risk. The Oshkosh is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 9,542 in Oshkosh on November 18, 2024 and sell it today you would earn a total of 1,198 from holding Oshkosh or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terex vs. Oshkosh
Performance |
| Timeline |
| Terex |
| Oshkosh |
Terex and Oshkosh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terex and Oshkosh
The main advantage of trading using opposite Terex and Oshkosh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex position performs unexpectedly, Oshkosh 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 Oshkosh will offset losses from the drop in Oshkosh's long position.| Terex vs. Oshkosh | Terex vs. Astec Industries | Terex vs. Hyster Yale Materials Handling | Terex vs. Manitowoc |
| Oshkosh vs. Terex | Oshkosh vs. Astec Industries | Oshkosh vs. Hyster Yale Materials Handling | Oshkosh 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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