Correlation Between Crane and Ametek

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

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

Diversification Opportunities for Crane and Ametek

0.93

Correlation Coefficient

Crane  Ametek

Almost no diversification

The 3 months correlation between Crane and Ametek is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Crane 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 Crane Company are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Crane i.e., Crane and Ametek go up and down completely randomly.

Pair Corralation between Crane and Ametek

Allowing for the 90-day total investment horizon Crane Company is expected to under-perform the Ametek. In addition to that, Crane is 2.38 times more volatile than Ametek Inc. It trades about -0.19 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.22 per unit of volatility. If you would invest  19,296  in Ametek Inc on September 18, 2024 and sell it today you would lose (625.00) from holding Ametek Inc or give up 3.24% of portfolio value over 90 days.

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

Crane Company  vs.  Ametek Inc

Crane Company

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ametek Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crane and Ametek

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

The idea behind Crane Company and Ametek Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.