Correlation Between Hyster Yale and Terex

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

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

Diversification Opportunities for Hyster Yale and Terex

0.74

Correlation Coefficient

Hyster Yale  Terex

Poor diversification

The 3 months correlation between Hyster and Terex is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Hyster Yale i.e., Hyster Yale and Terex go up and down completely randomly.

Pair Corralation between Hyster Yale and Terex

Allowing for the 90-day total investment horizon Hyster Yale is expected to generate 13.57 times less return on investment than Terex. But when comparing it to its historical volatility, Hyster Yale Materials Handling is 1.16 times less risky than Terex. It trades about 0.01 of its potential returns per unit of risk. Terex is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,936  in Terex on May 6, 2025 and sell it today you would earn a total of  960.00  from holding Terex or generate 24.39% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  Terex

Hyster Yale Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hyster Yale is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Terex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terex are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Terex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster Yale and Terex

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

The idea behind Hyster Yale Materials Handling and Terex 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.