Correlation Between Hillenbrand and Global Payments
Can any of the company-specific risk be diversified away by investing in both Hillenbrand and Global Payments 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 Hillenbrand and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and Global Payments, you can compare the effects of market volatilities on Hillenbrand and Global Payments 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 Hillenbrand with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Global Payments.
Diversification Opportunities for Hillenbrand and Global Payments
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hillenbrand and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Hillenbrand 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 Hillenbrand are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of Hillenbrand i.e., Hillenbrand and Global Payments go up and down completely randomly.
Pair Corralation between Hillenbrand and Global Payments
Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Global Payments. In addition to that, Hillenbrand is 1.49 times more volatile than Global Payments. It trades about -0.06 of its total potential returns per unit of risk. Global Payments is currently generating about 0.09 per unit of volatility. If you would invest 9,859 in Global Payments on August 31, 2024 and sell it today you would earn a total of 2,037 from holding Global Payments or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillenbrand vs. Global Payments
Performance |
| Timeline |
| Hillenbrand |
| Global Payments |
Hillenbrand and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillenbrand and Global Payments
The main advantage of trading using opposite Hillenbrand and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand position performs unexpectedly, Global Payments 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 Global Payments will offset losses from the drop in Global Payments' long position.| Hillenbrand vs. IDEX Corporation | Hillenbrand vs. Watts Water Technologies | Hillenbrand vs. Donaldson | Hillenbrand vs. Gorman Rupp |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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