Correlation Between Platinum and Crane

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

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

Diversification Opportunities for Platinum and Crane

0.0

Correlation Coefficient

Platinum  Crane

Pay attention - limited upside

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

Pair Corralation between Platinum and Crane

If you would invest  13,111  in Crane Company on March 12, 2024 and sell it today you would earn a total of  1,087  from holding Crane Company or generate 8.29% return on investment over 90 days.

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

Platinum  vs.  Crane Company

Platinum

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Platinum is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Crane Company

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Platinum and Crane

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

The idea behind Platinum and Crane Company 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.