Correlation Between Terex and Hyster Yale

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

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

Diversification Opportunities for Terex and Hyster Yale

0.36

Correlation Coefficient

Terex  Hyster Yale

Weak diversification

The 3 months correlation between Terex and Hyster is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials and Terex 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 Terex are associated (or correlated) with Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Terex i.e., Terex and Hyster Yale go up and down completely randomly.

Pair Corralation between Terex and Hyster Yale

Considering the 90-day investment horizon Terex is expected to generate 84.82 times less return on investment than Hyster Yale. But when comparing it to its historical volatility, Terex is 3.15 times less risky than Hyster Yale. It trades about 0.01 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,882  in Hyster Yale Materials Handling on March 5, 2024 and sell it today you would earn a total of  1,377  from holding Hyster Yale Materials Handling or generate 23.41% return on investment over 90 days.

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

Terex  vs.  Hyster Yale Materials Handling

Terex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Terex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Terex may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Hyster Yale Materials

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyster Yale Materials Handling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hyster Yale showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terex and Hyster Yale

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

The idea behind Terex and Hyster Yale Materials Handling 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.