Correlation Between Hannon Armstrong and TPI Composites
Can any of the company-specific risk be diversified away by investing in both Hannon Armstrong and TPI Composites 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 Hannon Armstrong and TPI Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannon Armstrong Sustainable and TPI Composites, you can compare the effects of market volatilities on Hannon Armstrong and TPI Composites 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 Hannon Armstrong with a short position of TPI Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannon Armstrong and TPI Composites.
Diversification Opportunities for Hannon Armstrong and TPI Composites
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hannon and TPI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hannon Armstrong Sustainable and TPI Composites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPI Composites and Hannon Armstrong 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 Hannon Armstrong Sustainable are associated (or correlated) with TPI Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPI Composites has no effect on the direction of Hannon Armstrong i.e., Hannon Armstrong and TPI Composites go up and down completely randomly.
Pair Corralation between Hannon Armstrong and TPI Composites
Given the investment horizon of 90 days Hannon Armstrong Sustainable is expected to generate 0.55 times more return on investment than TPI Composites. However, Hannon Armstrong Sustainable is 1.81 times less risky than TPI Composites. It trades about -0.2 of its potential returns per unit of risk. TPI Composites is currently generating about -0.35 per unit of risk. If you would invest 3,453 in Hannon Armstrong Sustainable on August 27, 2024 and sell it today you would lose (552.00) from holding Hannon Armstrong Sustainable or give up 15.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannon Armstrong Sustainable vs. TPI Composites
Performance |
| Timeline |
| Hannon Armstrong Sus |
| TPI Composites |
Hannon Armstrong and TPI Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannon Armstrong and TPI Composites
The main advantage of trading using opposite Hannon Armstrong and TPI Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannon Armstrong position performs unexpectedly, TPI Composites 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 TPI Composites will offset losses from the drop in TPI Composites' long position.| Hannon Armstrong vs. Equinix | Hannon Armstrong vs. Crown Castle | Hannon Armstrong vs. American Tower Corp | Hannon Armstrong vs. Iron Mountain Incorporated |
| TPI Composites vs. Babcock Wilcox Enterprises | TPI Composites vs. Franklin Electric Co | TPI Composites vs. Crane Company | TPI Composites vs. Luxfer Holdings PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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