Correlation Between Gorman Rupp and Crane

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

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

Diversification Opportunities for Gorman Rupp and Crane

0.9

Correlation Coefficient

Gorman Rupp  Crane

Almost no diversification

The 3 months correlation between Gorman and Crane is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and Gorman Rupp 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 Gorman Rupp are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Gorman Rupp i.e., Gorman Rupp and Crane go up and down completely randomly.

Pair Corralation between Gorman Rupp and Crane

Considering the 90-day investment horizon Gorman Rupp is expected to generate 0.86 times more return on investment than Crane. However, Gorman Rupp is 1.16 times less risky than Crane. It trades about 0.11 of its potential returns per unit of risk. Crane Company is currently generating about 0.1 per unit of risk. If you would invest  3,309  in Gorman Rupp on August 23, 2024 and sell it today you would earn a total of  897.00  from holding Gorman Rupp or generate 27.11% return on investment over 90 days.

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

Gorman Rupp  vs.  Crane Company

Gorman Rupp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gorman Rupp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Gorman Rupp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Crane Company

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gorman Rupp and Crane

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

The idea behind Gorman Rupp and Crane Company 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.