Correlation Between Chart Industries and Dover

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

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

Diversification Opportunities for Chart Industries and Dover

0.55

Correlation Coefficient

Chart Industries  Dover

Very weak diversification

The 3 months correlation between Chart and Dover is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover and Chart 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 Chart Industries are associated (or correlated) with Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Chart Industries i.e., Chart Industries and Dover go up and down completely randomly.

Pair Corralation between Chart Industries and Dover

Given the investment horizon of 90 days Chart Industries is expected to generate 2.12 times more return on investment than Dover. However, Chart Industries is 2.12 times more volatile than Dover. It trades about 0.1 of its potential returns per unit of risk. Dover is currently generating about -0.32 per unit of risk. If you would invest  19,108  in Chart Industries on October 8, 2024 and sell it today you would earn a total of  788.00  from holding Chart Industries or generate 4.12% return on investment over 90 days.

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

Chart Industries  vs.  Dover

Chart Industries

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dover

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dover are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dover is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chart Industries and Dover

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

The idea behind Chart Industries and Dover 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.