Correlation Between Alamo and Manitowoc

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

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

Diversification Opportunities for Alamo and Manitowoc

0.26

Correlation Coefficient

Alamo  Manitowoc

Modest diversification

The 3 months correlation between Alamo and Manitowoc is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc and Alamo 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 Alamo Group are associated (or correlated) with Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Alamo i.e., Alamo and Manitowoc go up and down completely randomly.

Pair Corralation between Alamo and Manitowoc

Considering the 90-day investment horizon Alamo Group is expected to generate 0.62 times more return on investment than Manitowoc. However, Alamo Group is 1.61 times less risky than Manitowoc. It trades about 0.06 of its potential returns per unit of risk. Manitowoc is currently generating about 0.01 per unit of risk. If you would invest  12,512  in Alamo Group on January 19, 2024 and sell it today you would earn a total of  8,061  from holding Alamo Group or generate 64.43% return on investment over 90 days.

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

Alamo Group  vs.  Manitowoc

Alamo Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Alamo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Manitowoc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manitowoc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Alamo and Manitowoc

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

The idea behind Alamo Group and Manitowoc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..