Correlation Between Crane and Greenwave Technology

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

By analyzing existing cross correlation between Crane Company and Greenwave Technology Solutions, you can compare the effects of market volatilities on Crane and Greenwave Technology 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 Greenwave Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Greenwave Technology.

Diversification Opportunities for Crane and Greenwave Technology

0.05

Correlation Coefficient

Crane  Greenwave Technology

Significant diversification

The 3 months correlation between Crane and Greenwave is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Greenwave Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenwave Technology 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 Greenwave Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenwave Technology has no effect on the direction of Crane i.e., Crane and Greenwave Technology go up and down completely randomly.

Pair Corralation between Crane and Greenwave Technology

Allowing for the 90-day total investment horizon Crane is expected to generate 6.61 times less return on investment than Greenwave Technology. But when comparing it to its historical volatility, Crane Company is 6.25 times less risky than Greenwave Technology. It trades about 0.1 of its potential returns per unit of risk. Greenwave Technology Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Greenwave Technology Solutions on September 13, 2024 and sell it today you would earn a total of  25.00  from holding Greenwave Technology Solutions or generate 55.56% return on investment over 90 days.

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

Crane Company  vs.  Greenwave Technology Solutions

Crane Company

Risk-Adjusted Performance

8 of 100

OK

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

Greenwave Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenwave Technology Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Greenwave Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and Greenwave Technology

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

The idea behind Crane Company and Greenwave Technology Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.