Correlation Between Crane and Atmus Filtration

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

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

Diversification Opportunities for Crane and Atmus Filtration

0.68

Correlation Coefficient

Crane  Atmus Filtration

Poor diversification

The 3 months correlation between Crane and Atmus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Atmus Filtration Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmus Filtration Tec and Crane 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 Crane Company are associated (or correlated) with Atmus Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmus Filtration Tec has no effect on the direction of Crane i.e., Crane and Atmus Filtration go up and down completely randomly.

Pair Corralation between Crane and Atmus Filtration

Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.99 times more return on investment than Atmus Filtration. However, Crane Company is 1.01 times less risky than Atmus Filtration. It trades about 0.09 of its potential returns per unit of risk. Atmus Filtration Technologies is currently generating about -0.01 per unit of risk. If you would invest  15,330  in Crane Company on March 8, 2025 and sell it today you would earn a total of  2,159  from holding Crane Company or generate 14.08% return on investment over 90 days.

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

Crane Company  vs.  Atmus Filtration Technologies

Crane Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Atmus Filtration Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atmus Filtration Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Atmus Filtration is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crane and Atmus Filtration

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

The idea behind Crane Company and Atmus Filtration Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.