Correlation Between Urban Gro and Columbus McKinnon

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Can any of the company-specific risk be diversified away by investing in both Urban Gro and Columbus McKinnon 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 Urban Gro and Columbus McKinnon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Gro and Columbus McKinnon, you can compare the effects of market volatilities on Urban Gro and Columbus McKinnon 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 Urban Gro with a short position of Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Gro and Columbus McKinnon.

Diversification Opportunities for Urban Gro and Columbus McKinnon

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Urban and Columbus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Urban Gro and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Urban Gro 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 Urban Gro are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Urban Gro i.e., Urban Gro and Columbus McKinnon go up and down completely randomly.

Pair Corralation between Urban Gro and Columbus McKinnon

Given the investment horizon of 90 days Urban Gro is expected to under-perform the Columbus McKinnon. In addition to that, Urban Gro is 2.84 times more volatile than Columbus McKinnon. It trades about -0.15 of its total potential returns per unit of risk. Columbus McKinnon is currently generating about -0.03 per unit of volatility. If you would invest  3,524  in Columbus McKinnon on November 9, 2024 and sell it today you would lose (50.00) from holding Columbus McKinnon or give up 1.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Urban Gro  vs.  Columbus McKinnon

 Performance 
       Timeline  
Urban Gro 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Urban Gro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Columbus McKinnon 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Columbus McKinnon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Columbus McKinnon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Urban Gro and Columbus McKinnon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Urban Gro and Columbus McKinnon

The main advantage of trading using opposite Urban Gro and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Gro position performs unexpectedly, Columbus McKinnon 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 Columbus McKinnon will offset losses from the drop in Columbus McKinnon's long position.
The idea behind Urban Gro and Columbus McKinnon 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.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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