Correlation Between AGCO and Manitex International

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

By analyzing existing cross correlation between AGCO Corporation and Manitex International, you can compare the effects of market volatilities on AGCO and Manitex International 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 Manitex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Manitex International.

Diversification Opportunities for AGCO and Manitex International

-0.12

Correlation Coefficient

AGCO  Manitex International

Good diversification

The 3 months correlation between AGCO and Manitex is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Manitex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitex International 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 Manitex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitex International has no effect on the direction of AGCO i.e., AGCO and Manitex International go up and down completely randomly.

Pair Corralation between AGCO and Manitex International

Given the investment horizon of 90 days AGCO Corporation is expected to under-perform the Manitex International. But the stock apears to be less risky and, when comparing its historical volatility, AGCO Corporation is 4.79 times less risky than Manitex International. The stock trades about -0.08 of its potential returns per unit of risk. The Manitex International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Manitex International on February 16, 2024 and sell it today you would earn a total of  105.00  from holding Manitex International or generate 18.78% return on investment over 90 days.

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

AGCO Corp.  vs.  Manitex International

AGCO

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGCO Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Manitex International

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manitex International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Manitex International may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with AGCO and Manitex International

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

The idea behind AGCO Corporation and Manitex International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.