Correlation Between Terex and Shyft

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

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

Diversification Opportunities for Terex and Shyft

0.25

Correlation Coefficient

Terex  Shyft

Modest diversification

The 3 months correlation between Terex and Shyft is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Shyft Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyft Group and Terex 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 Terex are associated (or correlated) with Shyft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyft Group has no effect on the direction of Terex i.e., Terex and Shyft go up and down completely randomly.

Pair Corralation between Terex and Shyft

Considering the 90-day investment horizon Terex is expected to under-perform the Shyft. But the stock apears to be less risky and, when comparing its historical volatility, Terex is 1.85 times less risky than Shyft. The stock trades about -0.2 of its potential returns per unit of risk. The Shyft Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,364  in Shyft Group on September 19, 2024 and sell it today you would lose (106.50) from holding Shyft Group or give up 7.81% of portfolio value over 90 days.

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

Terex  vs.  Shyft Group

Terex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shyft Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyft Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shyft is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Terex and Shyft

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

The idea behind Terex and Shyft Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.