Correlation Between AGCO and Hyster Yale

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

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

Diversification Opportunities for AGCO and Hyster Yale

0.07

Correlation Coefficient

AGCO  Hyster Yale

Significant diversification

The 3 months correlation between AGCO and Hyster is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials and AGCO 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 AGCO Corporation are associated (or correlated) with Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of AGCO i.e., AGCO and Hyster Yale go up and down completely randomly.

Pair Corralation between AGCO and Hyster Yale

Given the investment horizon of 90 days AGCO Corporation is expected to generate 0.78 times more return on investment than Hyster Yale. However, AGCO Corporation is 1.28 times less risky than Hyster Yale. It trades about 0.04 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about 0.03 per unit of risk. If you would invest  11,762  in AGCO Corporation on January 26, 2024 and sell it today you would earn a total of  107.00  from holding AGCO Corporation or generate 0.91% return on investment over 90 days.

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

AGCO Corp.  vs.  Hyster Yale Materials Handling

AGCO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGCO Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, AGCO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AGCO and Hyster Yale

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

The idea behind AGCO Corporation and Hyster Yale Materials Handling 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.