Correlation Between FutureFuel Corp and Hawkins
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp 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 FutureFuel Corp and Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and Hawkins, you can compare the effects of market volatilities on FutureFuel Corp 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 FutureFuel Corp with a short position of Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Hawkins.
Diversification Opportunities for FutureFuel Corp and Hawkins
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between FutureFuel and Hawkins is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and FutureFuel Corp 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 FutureFuel Corp 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 FutureFuel Corp i.e., FutureFuel Corp and Hawkins go up and down completely randomly.
Pair Corralation between FutureFuel Corp and Hawkins
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to under-perform the Hawkins. In addition to that, FutureFuel Corp is 1.17 times more volatile than Hawkins. It trades about -0.07 of its total potential returns per unit of risk. Hawkins is currently generating about 0.07 per unit of volatility. If you would invest 12,262 in Hawkins on August 28, 2024 and sell it today you would earn a total of 1,285 from holding Hawkins or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
FutureFuel Corp vs. Hawkins
Performance |
| Timeline |
| FutureFuel Corp |
| Hawkins |
FutureFuel Corp and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and Hawkins
The main advantage of trading using opposite FutureFuel Corp and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp 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.| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. H B Fuller | FutureFuel Corp vs. Northern Technologies | FutureFuel Corp vs. Cabot |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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