Correlation Between Espey Mfg and Hubbell
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and Hubbell 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 Espey Mfg and Hubbell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and Hubbell, you can compare the effects of market volatilities on Espey Mfg and Hubbell 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 Espey Mfg with a short position of Hubbell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Hubbell.
Diversification Opportunities for Espey Mfg and Hubbell
Very poor diversification
The 3 months correlation between Espey and Hubbell is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of Espey Mfg i.e., Espey Mfg and Hubbell go up and down completely randomly.
Pair Corralation between Espey Mfg and Hubbell
Considering the 90-day investment horizon Espey Mfg Electronics is expected to under-perform the Hubbell. But the stock apears to be less risky and, when comparing its historical volatility, Espey Mfg Electronics is 1.32 times less risky than Hubbell. The stock trades about -0.17 of its potential returns per unit of risk. The Hubbell is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44,472 in Hubbell on August 24, 2024 and sell it today you would earn a total of 1,176 from holding Hubbell or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. Hubbell
Performance |
| Timeline |
| Espey Mfg Electronics |
| Hubbell |
Espey Mfg and Hubbell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and Hubbell
The main advantage of trading using opposite Espey Mfg and Hubbell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, Hubbell 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 Hubbell will offset losses from the drop in Hubbell's long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| Hubbell vs. Advanced Energy Industries | Hubbell vs. Enersys | Hubbell vs. Acuity Brands | Hubbell vs. Kimball Electronics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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