Correlation Between Hillenbrand and Masco
Can any of the company-specific risk be diversified away by investing in both Hillenbrand and Masco 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 Masco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and Masco, you can compare the effects of market volatilities on Hillenbrand and Masco 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 Masco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Masco.
Diversification Opportunities for Hillenbrand and Masco
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hillenbrand and Masco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Masco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco 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 Masco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco has no effect on the direction of Hillenbrand i.e., Hillenbrand and Masco go up and down completely randomly.
Pair Corralation between Hillenbrand and Masco
Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Masco. In addition to that, Hillenbrand is 1.83 times more volatile than Masco. It trades about -0.05 of its total potential returns per unit of risk. Masco is currently generating about 0.11 per unit of volatility. If you would invest 6,683 in Masco on August 27, 2024 and sell it today you would earn a total of 1,534 from holding Masco or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillenbrand vs. Masco
Performance |
| Timeline |
| Hillenbrand |
| Masco |
Hillenbrand and Masco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillenbrand and Masco
The main advantage of trading using opposite Hillenbrand and Masco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand position performs unexpectedly, Masco 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 Masco will offset losses from the drop in Masco's long position.| Hillenbrand vs. Aquagold International | Hillenbrand vs. Morningstar Unconstrained Allocation | Hillenbrand vs. High Yield Municipal Fund | Hillenbrand vs. Thrivent High Yield |
| Masco vs. Trane Technologies plc | Masco vs. Quanex Building Products | Masco vs. Jeld Wen Holding | Masco vs. Azek Company |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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