Correlation Between AGCO and Manitowoc

Can any of the company-specific risk be diversified away by investing in both AGCO 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 AGCO and Manitowoc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGCO Corporation and Manitowoc, you can compare the effects of market volatilities on AGCO 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 AGCO with a short position of Manitowoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Manitowoc.

Diversification Opportunities for AGCO and Manitowoc

0.45

Correlation Coefficient

AGCO  Manitowoc

Very weak diversification

The 3 months correlation between AGCO and Manitowoc is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc and AGCO 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 AGCO Corporation 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 AGCO i.e., AGCO and Manitowoc go up and down completely randomly.

Pair Corralation between AGCO and Manitowoc

Given the investment horizon of 90 days AGCO Corporation is expected to under-perform the Manitowoc. But the stock apears to be less risky and, when comparing its historical volatility, AGCO Corporation is 1.41 times less risky than Manitowoc. The stock trades about -0.01 of its potential returns per unit of risk. The Manitowoc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,063  in Manitowoc on November 28, 2024 and sell it today you would earn a total of  0.00  from holding Manitowoc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AGCO Corp.  vs.  Manitowoc

AGCO

Risk-Adjusted Performance

Very Weak

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

Manitowoc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manitowoc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Manitowoc is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AGCO and Manitowoc

The main advantage of trading using opposite AGCO and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO 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.

The idea behind AGCO Corporation and Manitowoc 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.