Correlation Between IDEX and Crane NXT

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

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

Diversification Opportunities for IDEX and Crane NXT

0.03

Correlation Coefficient

IDEX  Crane NXT

Significant diversification

The 3 months correlation between IDEX and Crane is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Crane NXT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane NXT and IDEX 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 IDEX Corporation 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 IDEX i.e., IDEX and Crane NXT go up and down completely randomly.

Pair Corralation between IDEX and Crane NXT

Considering the 90-day investment horizon IDEX Corporation is expected to under-perform the Crane NXT. In addition to that, IDEX is 1.06 times more volatile than Crane NXT Co. It trades about -0.12 of its total potential returns per unit of risk. Crane NXT Co is currently generating about 0.07 per unit of volatility. If you would invest  5,631  in Crane NXT Co on November 19, 2024 and sell it today you would earn a total of  350.00  from holding Crane NXT Co or generate 6.22% return on investment over 90 days.

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

IDEX Corp.  vs.  Crane NXT Co

IDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Crane NXT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crane NXT Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Crane NXT may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with IDEX and Crane NXT

The main advantage of trading using opposite IDEX and Crane NXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX 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 IDEX Corporation 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.