Correlation Between Crawford and Cal-Bay Intl

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

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

Diversification Opportunities for Crawford and Cal-Bay Intl

0.06

Correlation Coefficient

Crawford  Cal-Bay Intl

Significant diversification

The 3 months correlation between Crawford and Cal-Bay is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and Cal Bay Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Bay Intl and Crawford 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 Crawford Company are associated (or correlated) with Cal-Bay Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Bay Intl has no effect on the direction of Crawford i.e., Crawford and Cal-Bay Intl go up and down completely randomly.

Pair Corralation between Crawford and Cal-Bay Intl

Assuming the 90 days horizon Crawford Company is expected to under-perform the Cal-Bay Intl. But the stock apears to be less risky and, when comparing its historical volatility, Crawford Company is 36.98 times less risky than Cal-Bay Intl. The stock trades about 0.0 of its potential returns per unit of risk. The Cal Bay Intl is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Cal Bay Intl on March 5, 2024 and sell it today you would earn a total of  0.00  from holding Cal Bay Intl or generate 0.0% return on investment over 90 days.

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

Crawford Company  vs.  Cal Bay Intl

Crawford

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crawford Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crawford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cal Bay Intl

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Bay Intl are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Cal-Bay Intl demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crawford and Cal-Bay Intl

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

The idea behind Crawford Company and Cal Bay Intl 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.