Correlation Between Lindsay and Columbus McKinnon

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

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

Diversification Opportunities for Lindsay and Columbus McKinnon

0.71

Correlation Coefficient

Lindsay  Columbus McKinnon

Poor diversification

The 3 months correlation between Lindsay and Columbus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Lindsay 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 Lindsay are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Lindsay i.e., Lindsay and Columbus McKinnon go up and down completely randomly.

Pair Corralation between Lindsay and Columbus McKinnon

Considering the 90-day investment horizon Lindsay is expected to generate 1.99 times less return on investment than Columbus McKinnon. But when comparing it to its historical volatility, Lindsay is 1.08 times less risky than Columbus McKinnon. It trades about 0.05 of its potential returns per unit of risk. Columbus McKinnon is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,414  in Columbus McKinnon on August 30, 2024 and sell it today you would earn a total of  496.00  from holding Columbus McKinnon or generate 14.53% return on investment over 90 days.

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

Lindsay  vs.  Columbus McKinnon

Lindsay

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Columbus McKinnon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus McKinnon are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Columbus McKinnon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindsay and Columbus McKinnon

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

The idea behind Lindsay and Columbus McKinnon 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.