Correlation Between Rev and Manitex International

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

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

Diversification Opportunities for Rev and Manitex International

0.03

Correlation Coefficient

Rev  Manitex International

Significant diversification

The 3 months correlation between Rev and Manitex is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group and Manitex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitex International and Rev 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 Rev Group are associated (or correlated) with Manitex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitex International has no effect on the direction of Rev i.e., Rev and Manitex International go up and down completely randomly.

Pair Corralation between Rev and Manitex International

Given the investment horizon of 90 days Rev Group is expected to generate 0.57 times more return on investment than Manitex International. However, Rev Group is 1.74 times less risky than Manitex International. It trades about 0.06 of its potential returns per unit of risk. Manitex International is currently generating about 0.02 per unit of risk. If you would invest  2,595  in Rev Group on August 30, 2024 and sell it today you would earn a total of  490.00  from holding Rev Group or generate 18.88% return on investment over 90 days.

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

Rev Group  vs.  Manitex International

Rev Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rev Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rev is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Manitex International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manitex International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Manitex International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rev and Manitex International

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

The idea behind Rev Group and Manitex International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..