Correlation Between Manitowoc and Alamo

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

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

Diversification Opportunities for Manitowoc and Alamo

0.34

Correlation Coefficient

Manitowoc  Alamo

Weak diversification

The 3 months correlation between Manitowoc and Alamo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Manitowoc and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Manitowoc 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 Manitowoc are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Manitowoc i.e., Manitowoc and Alamo go up and down completely randomly.

Pair Corralation between Manitowoc and Alamo

Considering the 90-day investment horizon Manitowoc is expected to generate 2.24 times more return on investment than Alamo. However, Manitowoc is 2.24 times more volatile than Alamo Group. It trades about 0.05 of its potential returns per unit of risk. Alamo Group is currently generating about 0.01 per unit of risk. If you would invest  877.00  in Manitowoc on December 29, 2024 and sell it today you would earn a total of  66.00  from holding Manitowoc or generate 7.53% return on investment over 90 days.

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

Manitowoc  vs.  Alamo Group

Manitowoc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manitowoc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Manitowoc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alamo Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Alamo is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Manitowoc and Alamo

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

The idea behind Manitowoc and Alamo Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.