Correlation Between Crane NXT and Tennant

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

Diversification Opportunities for Crane NXT and Tennant

0.32

Correlation Coefficient

Crane NXT  Tennant

Weak diversification

The 3 months correlation between Crane and Tennant is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Crane NXT i.e., Crane NXT and Tennant go up and down completely randomly.

Pair Corralation between Crane NXT and Tennant

Considering the 90-day investment horizon Crane NXT Co is expected to under-perform the Tennant. In addition to that, Crane NXT is 1.09 times more volatile than Tennant Company. It trades about -0.11 of its total potential returns per unit of risk. Tennant Company is currently generating about 0.03 per unit of volatility. If you would invest  8,105  in Tennant Company on December 28, 2024 and sell it today you would earn a total of  141.00  from holding Tennant Company or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Crane NXT Co  vs.  Tennant Company

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.

Tennant Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tennant Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Tennant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Crane NXT and Tennant

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

The idea behind Crane NXT Co and Tennant Company 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.