Correlation Between Hyster Yale and Marten Transport

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

By analyzing existing cross correlation between Hyster Yale Materials Handling and Marten Transport, you can compare the effects of market volatilities on Hyster Yale and Marten Transport 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 Hyster Yale with a short position of Marten Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and Marten Transport.

Diversification Opportunities for Hyster Yale and Marten Transport

0.77

Correlation Coefficient

Hyster Yale  Marten Transport

Poor diversification

The 3 months correlation between Hyster and Marten is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Hyster Yale i.e., Hyster Yale and Marten Transport go up and down completely randomly.

Pair Corralation between Hyster Yale and Marten Transport

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to generate 1.48 times more return on investment than Marten Transport. However, Hyster Yale is 1.48 times more volatile than Marten Transport. It trades about -0.07 of its potential returns per unit of risk. Marten Transport is currently generating about -0.1 per unit of risk. If you would invest  4,984  in Hyster Yale Materials Handling on December 27, 2024 and sell it today you would lose (538.00) from holding Hyster Yale Materials Handling or give up 10.79% of portfolio value over 90 days.

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

Hyster Yale Materials Handling  vs.  Marten Transport

Hyster Yale Materials

Risk-Adjusted Performance

Very Weak

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

Marten Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Hyster Yale and Marten Transport

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

The idea behind Hyster Yale Materials Handling and Marten Transport 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.