Correlation Between Capital Drilling and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Capital Drilling and Hilton Food 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 Capital Drilling and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Drilling and Hilton Food Group, you can compare the effects of market volatilities on Capital Drilling and Hilton Food 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 Capital Drilling with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Hilton Food.
Diversification Opportunities for Capital Drilling and Hilton Food
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capital and Hilton is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and Capital Drilling 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 Capital Drilling are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Capital Drilling i.e., Capital Drilling and Hilton Food go up and down completely randomly.
Pair Corralation between Capital Drilling and Hilton Food
Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Hilton Food. In addition to that, Capital Drilling is 1.58 times more volatile than Hilton Food Group. It trades about -0.07 of its total potential returns per unit of risk. Hilton Food Group is currently generating about -0.04 per unit of volatility. If you would invest 90,638 in Hilton Food Group on August 28, 2024 and sell it today you would lose (1,238) from holding Hilton Food Group or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Drilling vs. Hilton Food Group
Performance |
| Timeline |
| Capital Drilling |
| Hilton Food Group |
Capital Drilling and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Drilling and Hilton Food
The main advantage of trading using opposite Capital Drilling and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Drilling position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Enbridge | Capital Drilling vs. Endo International PLC | Capital Drilling vs. Diversified Energy |
| Hilton Food vs. Ryanair Holdings plc | Hilton Food vs. Amedeo Air Four | Hilton Food vs. Zurich Insurance Group | Hilton Food vs. Air Products Chemicals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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