Correlation Between Intevac and Crane

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

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

Diversification Opportunities for Intevac and Crane

-0.15

Correlation Coefficient

Intevac  Crane

Good diversification

The 3 months correlation between Intevac and Crane is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and Intevac 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 Intevac are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Intevac i.e., Intevac and Crane go up and down completely randomly.

Pair Corralation between Intevac and Crane

Given the investment horizon of 90 days Intevac is expected to generate 1.26 times more return on investment than Crane. However, Intevac is 1.26 times more volatile than Crane Company. It trades about 0.15 of its potential returns per unit of risk. Crane Company is currently generating about 0.01 per unit of risk. If you would invest  322.00  in Intevac on December 19, 2024 and sell it today you would earn a total of  82.00  from holding Intevac or generate 25.47% return on investment over 90 days.

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

Intevac  vs.  Crane Company

Intevac

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intevac are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Intevac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Crane Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intevac and Crane

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

The idea behind Intevac and Crane Company 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.