Correlation Between Crane NXT and Enpro Industries

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

Diversification Opportunities for Crane NXT and Enpro Industries

0.02

Correlation Coefficient

Crane NXT  Enpro Industries

Significant diversification

The 3 months correlation between Crane and Enpro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries 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 Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Crane NXT i.e., Crane NXT and Enpro Industries go up and down completely randomly.

Pair Corralation between Crane NXT and Enpro Industries

Considering the 90-day investment horizon Crane NXT is expected to generate 135.87 times less return on investment than Enpro Industries. But when comparing it to its historical volatility, Crane NXT Co is 1.18 times less risky than Enpro Industries. It trades about 0.0 of its potential returns per unit of risk. Enpro Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  16,026  in Enpro Industries on November 28, 2024 and sell it today you would earn a total of  4,004  from holding Enpro Industries or generate 24.98% return on investment over 90 days.

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

Crane NXT Co  vs.  Enpro Industries

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.

Enpro Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enpro Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Enpro Industries may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Crane NXT and Enpro Industries

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

The idea behind Crane NXT Co and Enpro Industries 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.