Correlation Between Lindsay and Manitowoc

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

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

Diversification Opportunities for Lindsay and Manitowoc

0.88

Correlation Coefficient

Lindsay  Manitowoc

Very poor diversification

The 3 months correlation between Lindsay and Manitowoc is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc and Lindsay 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 Lindsay 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 Lindsay i.e., Lindsay and Manitowoc go up and down completely randomly.

Pair Corralation between Lindsay and Manitowoc

Considering the 90-day investment horizon Lindsay is expected to generate 0.97 times more return on investment than Manitowoc. However, Lindsay is 1.03 times less risky than Manitowoc. It trades about 0.05 of its potential returns per unit of risk. Manitowoc is currently generating about -0.16 per unit of risk. If you would invest  11,537  in Lindsay on January 24, 2024 and sell it today you would earn a total of  145.00  from holding Lindsay or generate 1.26% return on investment over 90 days.

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

Lindsay  vs.  Manitowoc

Lindsay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindsay 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 unfluctuating 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 Lindsay and Manitowoc

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

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.