Correlation Between Marshall Ilsley and Crown Holdings

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

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

Diversification Opportunities for Marshall Ilsley and Crown Holdings

-0.51

Correlation Coefficient

Marshall Ilsley  Crown Holdings

Excellent diversification

The 3 months correlation between Marshall and Crown is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marshall Ilsley Corp and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Marshall Ilsley 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 Marshall Ilsley Corp are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Marshall Ilsley i.e., Marshall Ilsley and Crown Holdings go up and down completely randomly.

Pair Corralation between Marshall Ilsley and Crown Holdings

Allowing for the 90-day total investment horizon Marshall Ilsley Corp is expected to under-perform the Crown Holdings. In addition to that, Marshall Ilsley is 3.52 times more volatile than Crown Holdings. It trades about -0.04 of its total potential returns per unit of risk. Crown Holdings is currently generating about 0.0 per unit of volatility. If you would invest  9,194  in Crown Holdings on March 3, 2024 and sell it today you would lose (775.00) from holding Crown Holdings or give up 8.43% of portfolio value over 90 days.

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

Marshall Ilsley Corp  vs.  Crown Holdings

Marshall Ilsley Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marshall Ilsley Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Crown Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Crown Holdings may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Marshall Ilsley and Crown Holdings

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

The idea behind Marshall Ilsley Corp and Crown Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.