Correlation Between Crane and Nuscale Power

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

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

Diversification Opportunities for Crane and Nuscale Power

0.63

Correlation Coefficient

Crane  Nuscale Power

Poor diversification

The 3 months correlation between Crane and Nuscale is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Crane i.e., Crane and Nuscale Power go up and down completely randomly.

Pair Corralation between Crane and Nuscale Power

Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.29 times more return on investment than Nuscale Power. However, Crane Company is 3.39 times less risky than Nuscale Power. It trades about 0.02 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.0 per unit of risk. If you would invest  15,372  in Crane Company on December 27, 2024 and sell it today you would earn a total of  219.00  from holding Crane Company or generate 1.42% return on investment over 90 days.

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

Crane Company  vs.  Nuscale Power Corp

Crane Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 1 (%) 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.

Nuscale Power Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuscale Power Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Nuscale Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crane and Nuscale Power

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

The idea behind Crane Company and Nuscale Power 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.