Correlation Between Gencor Industries and Terex

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

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

Diversification Opportunities for Gencor Industries and Terex

0.7

Correlation Coefficient

Gencor Industries  Terex

Poor diversification

The 3 months correlation between Gencor and Terex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex and Gencor Industries 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 Gencor Industries are associated (or correlated) with Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Gencor Industries i.e., Gencor Industries and Terex go up and down completely randomly.

Pair Corralation between Gencor Industries and Terex

Given the investment horizon of 90 days Gencor Industries is expected to under-perform the Terex. In addition to that, Gencor Industries is 1.24 times more volatile than Terex. It trades about -0.15 of its total potential returns per unit of risk. Terex is currently generating about -0.07 per unit of volatility. If you would invest  4,502  in Terex on December 28, 2024 and sell it today you would lose (494.00) from holding Terex or give up 10.97% of portfolio value over 90 days.

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

Gencor Industries  vs.  Terex

Gencor Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gencor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Terex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gencor Industries and Terex

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

The idea behind Gencor Industries and Terex 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..