Correlation Between H B and Oil Dri
Can any of the company-specific risk be diversified away by investing in both H B and Oil Dri 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 Oil Dri 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 Oil Dri, you can compare the effects of market volatilities on H B and Oil Dri 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 Oil Dri. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Oil Dri.
Diversification Opportunities for H B and Oil Dri
Good diversification
The 3 months correlation between FUL and Oil is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Oil Dri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Dri 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 Oil Dri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Dri has no effect on the direction of H B i.e., H B and Oil Dri go up and down completely randomly.
Pair Corralation between H B and Oil Dri
Considering the 90-day investment horizon H B is expected to generate 7.15 times less return on investment than Oil Dri. But when comparing it to its historical volatility, H B Fuller is 1.68 times less risky than Oil Dri. It trades about 0.01 of its potential returns per unit of risk. Oil Dri is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,628 in Oil Dri on August 26, 2024 and sell it today you would earn a total of 1,433 from holding Oil Dri or generate 25.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H B Fuller vs. Oil Dri
Performance |
| Timeline |
| H B Fuller |
| Oil Dri |
H B and Oil Dri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H B and Oil Dri
The main advantage of trading using opposite H B and Oil Dri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B position performs unexpectedly, Oil Dri 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 Oil Dri will offset losses from the drop in Oil Dri's long position.The idea behind H B Fuller and Oil Dri 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.| Oil Dri vs. Quaker Chemical | Oil Dri vs. Minerals Technologies | Oil Dri vs. Innospec | Oil Dri vs. H B Fuller |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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