Correlation Between Crane and Ecosphere Technologies

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

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

Diversification Opportunities for Crane and Ecosphere Technologies

0.0

Correlation Coefficient

Crane  Ecosphere Technologies

Pay attention - limited upside

The 3 months correlation between Crane and Ecosphere is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Ecosphere Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecosphere Technologies and Crane 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 Company are associated (or correlated) with Ecosphere Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecosphere Technologies has no effect on the direction of Crane i.e., Crane and Ecosphere Technologies go up and down completely randomly.

Pair Corralation between Crane and Ecosphere Technologies

If you would invest  13,776  in Crane Company on February 7, 2024 and sell it today you would earn a total of  685.00  from holding Crane Company or generate 4.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Crane Company  vs.  Ecosphere Technologies

Crane Company

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Ecosphere Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecosphere Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Ecosphere Technologies is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Crane and Ecosphere Technologies

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

The idea behind Crane Company and Ecosphere Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.