Correlation Between Crawford and CorVel Corp

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

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

Diversification Opportunities for Crawford and CorVel Corp

0.54

Correlation Coefficient

Crawford  CorVel Corp

Very weak diversification

The 3 months correlation between Crawford and CorVel is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp and Crawford 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 Crawford Company are associated (or correlated) with CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of Crawford i.e., Crawford and CorVel Corp go up and down completely randomly.

Pair Corralation between Crawford and CorVel Corp

Assuming the 90 days horizon Crawford is expected to generate 1.55 times less return on investment than CorVel Corp. But when comparing it to its historical volatility, Crawford Company is 1.14 times less risky than CorVel Corp. It trades about 0.0 of its potential returns per unit of risk. CorVel Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  11,226  in CorVel Corp on December 30, 2024 and sell it today you would lose (90.00) from holding CorVel Corp or give up 0.8% of portfolio value over 90 days.

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

Crawford Company  vs.  CorVel Corp

Crawford

Risk-Adjusted Performance

Very Weak

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

CorVel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CorVel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CorVel Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Crawford and CorVel Corp

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

The idea behind Crawford Company and CorVel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.