Correlation Between Shyft and Arts Way

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

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

Diversification Opportunities for Shyft and Arts Way

-0.14

Correlation Coefficient

Shyft  Arts Way

Good diversification

The 3 months correlation between Shyft and Arts is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Shyft Group and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and Shyft 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 Shyft Group are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of Shyft i.e., Shyft and Arts Way go up and down completely randomly.

Pair Corralation between Shyft and Arts Way

Given the investment horizon of 90 days Shyft Group is expected to generate 1.02 times more return on investment than Arts Way. However, Shyft is 1.02 times more volatile than Arts Way Manufacturing Co. It trades about -0.16 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about -0.21 per unit of risk. If you would invest  1,364  in Shyft Group on September 17, 2024 and sell it today you would lose (92.00) from holding Shyft Group or give up 6.74% of portfolio value over 90 days.

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

Shyft Group  vs.  Arts Way Manufacturing Co

Shyft Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyft Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shyft is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arts Way Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Shyft and Arts Way

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

The idea behind Shyft Group and Arts Way Manufacturing 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.