Correlation Between Graco and Crane NXT

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

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

Diversification Opportunities for Graco and Crane NXT

-0.07

Correlation Coefficient

Graco  Crane NXT

Good diversification

The 3 months correlation between Graco and Crane is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Crane NXT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane NXT and Graco 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 Graco Inc are associated (or correlated) with Crane NXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane NXT has no effect on the direction of Graco i.e., Graco and Crane NXT go up and down completely randomly.

Pair Corralation between Graco and Crane NXT

Considering the 90-day investment horizon Graco Inc is expected to generate 0.71 times more return on investment than Crane NXT. However, Graco Inc is 1.4 times less risky than Crane NXT. It trades about 0.02 of its potential returns per unit of risk. Crane NXT Co is currently generating about -0.09 per unit of risk. If you would invest  8,387  in Graco Inc on December 27, 2024 and sell it today you would earn a total of  57.00  from holding Graco Inc or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Graco Inc  vs.  Crane NXT Co

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Graco and Crane NXT

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

The idea behind Graco Inc and Crane NXT Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.