Correlation Between Crane and Core Main

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

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

Diversification Opportunities for Crane and Core Main

0.88

Correlation Coefficient

Crane  Core Main

Very poor diversification

The 3 months correlation between Crane and Core is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main 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 Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of Crane i.e., Crane and Core Main go up and down completely randomly.

Pair Corralation between Crane and Core Main

Allowing for the 90-day total investment horizon Crane is expected to generate 1.11 times less return on investment than Core Main. But when comparing it to its historical volatility, Crane Company is 1.39 times less risky than Core Main. It trades about 0.17 of its potential returns per unit of risk. Core Main is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,334  in Core Main on May 4, 2025 and sell it today you would earn a total of  934.00  from holding Core Main or generate 17.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Crane Company  vs.  Core Main

Crane Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Core Main

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Core Main are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Core Main displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and Core Main

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

The idea behind Crane Company and Core Main 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.