Correlation Between Ideanomics and Columbus McKinnon

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

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

Diversification Opportunities for Ideanomics and Columbus McKinnon

-0.17

Correlation Coefficient

Ideanomics  Columbus McKinnon

Good diversification

The 3 months correlation between Ideanomics and Columbus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ideanomics and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Ideanomics 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 Ideanomics are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Ideanomics i.e., Ideanomics and Columbus McKinnon go up and down completely randomly.

Pair Corralation between Ideanomics and Columbus McKinnon

Given the investment horizon of 90 days Ideanomics is expected to generate 27.25 times more return on investment than Columbus McKinnon. However, Ideanomics is 27.25 times more volatile than Columbus McKinnon. It trades about 0.13 of its potential returns per unit of risk. Columbus McKinnon is currently generating about 0.12 per unit of risk. If you would invest  20.00  in Ideanomics on September 22, 2024 and sell it today you would lose (19.50) from holding Ideanomics or give up 97.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Ideanomics  vs.  Columbus McKinnon

Ideanomics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Columbus McKinnon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus McKinnon are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Columbus McKinnon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ideanomics and Columbus McKinnon

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

The idea behind Ideanomics and Columbus McKinnon 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.