Correlation Between Tennant and Brady

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

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

Diversification Opportunities for Tennant and Brady

-0.19

Correlation Coefficient

Tennant  Brady

Good diversification

The 3 months correlation between Tennant and Brady is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tennant Company and Brady in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brady and Tennant 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 Tennant Company are associated (or correlated) with Brady. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brady has no effect on the direction of Tennant i.e., Tennant and Brady go up and down completely randomly.

Pair Corralation between Tennant and Brady

Considering the 90-day investment horizon Tennant Company is expected to generate 1.19 times more return on investment than Brady. However, Tennant is 1.19 times more volatile than Brady. It trades about 0.16 of its potential returns per unit of risk. Brady is currently generating about 0.0 per unit of risk. If you would invest  7,050  in Tennant Company on May 7, 2025 and sell it today you would earn a total of  1,224  from holding Tennant Company or generate 17.36% return on investment over 90 days.

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

Tennant Company  vs.  Brady

Tennant Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tennant Company are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tennant exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brady

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brady has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brady is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tennant and Brady

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

The idea behind Tennant Company and Brady 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.