Correlation Between Crane NXT and Kornit Digital

Can any of the company-specific risk be diversified away by investing in both Crane NXT and Kornit Digital 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 Kornit Digital 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 Kornit Digital, you can compare the effects of market volatilities on Crane NXT and Kornit Digital 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 Kornit Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and Kornit Digital.

Diversification Opportunities for Crane NXT and Kornit Digital

0.56

Correlation Coefficient

Crane NXT  Kornit Digital

Very weak diversification

The 3 months correlation between Crane and Kornit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Kornit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kornit Digital 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 Kornit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kornit Digital has no effect on the direction of Crane NXT i.e., Crane NXT and Kornit Digital go up and down completely randomly.

Pair Corralation between Crane NXT and Kornit Digital

Considering the 90-day investment horizon Crane NXT Co is expected to generate 0.8 times more return on investment than Kornit Digital. However, Crane NXT Co is 1.24 times less risky than Kornit Digital. It trades about 0.71 of its potential returns per unit of risk. Kornit Digital is currently generating about -0.35 per unit of risk. If you would invest  5,681  in Crane NXT Co on October 22, 2024 and sell it today you would earn a total of  691.00  from holding Crane NXT Co or generate 12.16% return on investment over 90 days.

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

Crane NXT Co  vs.  Kornit Digital

Crane NXT

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crane NXT Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Crane NXT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kornit Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kornit Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kornit Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane NXT and Kornit Digital

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

The idea behind Crane NXT Co and Kornit Digital 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.