Correlation Between Rev and Shyft

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

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

Diversification Opportunities for Rev and Shyft

0.71

Correlation Coefficient

Rev  Shyft

Poor diversification

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

Pair Corralation between Rev and Shyft

Given the investment horizon of 90 days Rev Group is expected to generate 0.69 times more return on investment than Shyft. However, Rev Group is 1.44 times less risky than Shyft. It trades about 0.06 of its potential returns per unit of risk. Shyft Group is currently generating about -0.07 per unit of risk. If you would invest  3,133  in Rev Group on December 27, 2024 and sell it today you would earn a total of  234.00  from holding Rev Group or generate 7.47% return on investment over 90 days.

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

Rev Group  vs.  Shyft Group

Rev Group

Risk-Adjusted Performance

Insignificant

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

Shyft Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shyft Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rev and Shyft

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

The idea behind Rev Group and Shyft 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.

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