Correlation Between Crane and BG Staffing

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

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

Diversification Opportunities for Crane and BG Staffing

-0.49

Correlation Coefficient

Crane  BG Staffing

Very good diversification

The 3 months correlation between Crane and BGSF is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and BG Staffing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Staffing and Crane 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 Crane Company are associated (or correlated) with BG Staffing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Staffing has no effect on the direction of Crane i.e., Crane and BG Staffing go up and down completely randomly.

Pair Corralation between Crane and BG Staffing

Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.14 times more return on investment than BG Staffing. However, Crane is 1.14 times more volatile than BG Staffing. It trades about 0.13 of its potential returns per unit of risk. BG Staffing is currently generating about -0.13 per unit of risk. If you would invest  13,776  in Crane Company on February 7, 2024 and sell it today you would earn a total of  685.00  from holding Crane Company or generate 4.97% return on investment over 90 days.

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

Crane Company  vs.  BG Staffing

Crane Company

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

BG Staffing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Staffing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Crane and BG Staffing

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

The idea behind Crane Company and BG Staffing 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.