Correlation Between Butler National and Crawford United

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

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

Diversification Opportunities for Butler National and Crawford United

0.79

Correlation Coefficient

Butler National  Crawford United

Poor diversification

The 3 months correlation between Butler and Crawford is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Butler National Corp and Crawford United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford United and Butler National 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 Butler National Corp are associated (or correlated) with Crawford United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford United has no effect on the direction of Butler National i.e., Butler National and Crawford United go up and down completely randomly.

Pair Corralation between Butler National and Crawford United

If you would invest  118.00  in Butler National Corp on September 3, 2024 and sell it today you would earn a total of  49.00  from holding Butler National Corp or generate 41.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Butler National Corp  vs.  Crawford United

Butler National Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Butler National Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Butler National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crawford United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crawford United has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crawford United is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Butler National and Crawford United

The main advantage of trading using opposite Butler National and Crawford United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butler National position performs unexpectedly, Crawford United 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 Crawford United will offset losses from the drop in Crawford United's long position.

The idea behind Butler National Corp and Crawford United 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.