Correlation Between Element Solutions and Hawkins
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Hawkins 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 Element Solutions and Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Hawkins, you can compare the effects of market volatilities on Element Solutions and Hawkins 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 Element Solutions with a short position of Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Hawkins.
Diversification Opportunities for Element Solutions and Hawkins
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Element and Hawkins is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Element Solutions 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 Element Solutions are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Element Solutions i.e., Element Solutions and Hawkins go up and down completely randomly.
Pair Corralation between Element Solutions and Hawkins
Considering the 90-day investment horizon Element Solutions is expected to generate 0.42 times more return on investment than Hawkins. However, Element Solutions is 2.39 times less risky than Hawkins. It trades about 0.09 of its potential returns per unit of risk. Hawkins is currently generating about -0.17 per unit of risk. If you would invest 2,554 in Element Solutions on October 24, 2024 and sell it today you would earn a total of 41.00 from holding Element Solutions or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Hawkins
Performance |
| Timeline |
| Element Solutions |
| Hawkins |
Element Solutions and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Hawkins
The main advantage of trading using opposite Element Solutions and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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