Correlation Between Crane and JBTMarel Corp

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

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

Diversification Opportunities for Crane and JBTMarel Corp

0.26

Correlation Coefficient

Crane  JBTMarel Corp

Modest diversification

The 3 months correlation between Crane and JBTMarel is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and JBTMarel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBTMarel Corp 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 JBTMarel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBTMarel Corp has no effect on the direction of Crane i.e., Crane and JBTMarel Corp go up and down completely randomly.

Pair Corralation between Crane and JBTMarel Corp

Allowing for the 90-day total investment horizon Crane Company is expected to under-perform the JBTMarel Corp. But the stock apears to be less risky and, when comparing its historical volatility, Crane Company is 1.15 times less risky than JBTMarel Corp. The stock trades about -0.32 of its potential returns per unit of risk. The JBTMarel Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  12,328  in JBTMarel Corp on October 10, 2024 and sell it today you would lose (109.00) from holding JBTMarel Corp or give up 0.88% of portfolio value over 90 days.

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

Crane Company  vs.  JBTMarel Corp

Crane Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

JBTMarel Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JBTMarel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, JBTMarel Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and JBTMarel Corp

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

The idea behind Crane Company and JBTMarel Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.