Correlation Between Shyft and Columbus McKinnon

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

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

Diversification Opportunities for Shyft and Columbus McKinnon

0.38

Correlation Coefficient

Shyft  Columbus McKinnon

Weak diversification

The 3 months correlation between Shyft and Columbus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shyft Group and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Shyft 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 Shyft Group 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 Shyft i.e., Shyft and Columbus McKinnon go up and down completely randomly.

Pair Corralation between Shyft and Columbus McKinnon

Given the investment horizon of 90 days Shyft Group is expected to under-perform the Columbus McKinnon. In addition to that, Shyft is 2.17 times more volatile than Columbus McKinnon. It trades about -0.18 of its total potential returns per unit of risk. Columbus McKinnon is currently generating about -0.14 per unit of volatility. If you would invest  4,310  in Columbus McKinnon on February 1, 2024 and sell it today you would lose (175.00) from holding Columbus McKinnon or give up 4.06% of portfolio value over 90 days.

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

Shyft Group  vs.  Columbus McKinnon

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Columbus McKinnon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus McKinnon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Columbus McKinnon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shyft and Columbus McKinnon

The main advantage of trading using opposite Shyft and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft 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 Shyft Group 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.