Correlation Between Hillenbrand and Crane NXT

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

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

Diversification Opportunities for Hillenbrand and Crane NXT

0.87

Correlation Coefficient

Hillenbrand  Crane NXT

Very poor diversification

The 3 months correlation between Hillenbrand and Crane is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Crane NXT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane NXT and Hillenbrand 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 Hillenbrand 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 Hillenbrand i.e., Hillenbrand and Crane NXT go up and down completely randomly.

Pair Corralation between Hillenbrand and Crane NXT

Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Crane NXT. In addition to that, Hillenbrand is 1.61 times more volatile than Crane NXT Co. It trades about -0.09 of its total potential returns per unit of risk. Crane NXT Co is currently generating about -0.11 per unit of volatility. If you would invest  5,797  in Crane NXT Co on December 29, 2024 and sell it today you would lose (663.00) from holding Crane NXT Co or give up 11.44% of portfolio value over 90 days.

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

Hillenbrand  vs.  Crane NXT Co

Hillenbrand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillenbrand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Hillenbrand and Crane NXT

The main advantage of trading using opposite Hillenbrand and Crane NXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand 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 Hillenbrand 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.