Correlation Between Crane NXT and Capstone Green

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

By analyzing existing cross correlation between Crane NXT Co and Capstone Green Energy, you can compare the effects of market volatilities on Crane NXT and Capstone Green 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 Crane NXT with a short position of Capstone Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and Capstone Green.

Diversification Opportunities for Crane NXT and Capstone Green

-0.57

Correlation Coefficient

Crane NXT  Capstone Green

Excellent diversification

The 3 months correlation between Crane and Capstone is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy and Crane NXT 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 Crane NXT Co are associated (or correlated) with Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Crane NXT i.e., Crane NXT and Capstone Green go up and down completely randomly.

Pair Corralation between Crane NXT and Capstone Green

If you would invest  6,034  in Crane NXT Co on January 25, 2024 and sell it today you would earn a total of  290.00  from holding Crane NXT Co or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Crane NXT Co  vs.  Capstone Green Energy

Crane NXT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crane NXT Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Crane NXT may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Capstone Green Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Crane NXT and Capstone Green

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

The idea behind Crane NXT Co and Capstone Green Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.