Correlation Between H B and NewMarket
Can any of the company-specific risk be diversified away by investing in both H B and NewMarket 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 H B and NewMarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H B Fuller and NewMarket, you can compare the effects of market volatilities on H B and NewMarket 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 H B with a short position of NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and NewMarket.
Diversification Opportunities for H B and NewMarket
Almost no diversification
The 3 months correlation between FUL and NewMarket is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket and H B 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 H B Fuller are associated (or correlated) with NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of H B i.e., H B and NewMarket go up and down completely randomly.
Pair Corralation between H B and NewMarket
Considering the 90-day investment horizon H B Fuller is expected to under-perform the NewMarket. In addition to that, H B is 1.23 times more volatile than NewMarket. It trades about -0.15 of its total potential returns per unit of risk. NewMarket is currently generating about -0.07 per unit of volatility. If you would invest 53,748 in NewMarket on November 1, 2024 and sell it today you would lose (4,342) from holding NewMarket or give up 8.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
H B Fuller vs. NewMarket
Performance |
| Timeline |
| H B Fuller |
| NewMarket |
H B and NewMarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H B and NewMarket
The main advantage of trading using opposite H B and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.The idea behind H B Fuller and NewMarket 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.| NewMarket vs. H B Fuller | NewMarket vs. Minerals Technologies | NewMarket vs. Quaker Chemical | NewMarket 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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