Correlation Between Crane NXT and Hillenbrand

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

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

Diversification Opportunities for Crane NXT and Hillenbrand

0.87

Correlation Coefficient

Crane NXT  Hillenbrand

Very poor diversification

The 3 months correlation between Crane and Hillenbrand is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Crane NXT 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 NXT Co are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Crane NXT i.e., Crane NXT and Hillenbrand go up and down completely randomly.

Pair Corralation between Crane NXT and Hillenbrand

Considering the 90-day investment horizon Crane NXT Co is expected to generate 0.62 times more return on investment than Hillenbrand. However, Crane NXT Co is 1.61 times less risky than Hillenbrand. It trades about -0.11 of its potential returns per unit of risk. Hillenbrand is currently generating about -0.09 per unit of risk. If you would invest  5,797  in Crane NXT Co on December 29, 2024 and sell it today you would lose (663.00) from holding Crane NXT Co or give up 11.44% of portfolio value over 90 days.

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

Crane NXT Co  vs.  Hillenbrand

Crane NXT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crane NXT Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hillenbrand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillenbrand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Crane NXT and Hillenbrand

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

The idea behind Crane NXT Co and Hillenbrand 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.