Correlation Between HubSpot and Textron

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Can any of the company-specific risk be diversified away by investing in both HubSpot and Textron 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 HubSpot and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HubSpot and Textron, you can compare the effects of market volatilities on HubSpot and Textron 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 HubSpot with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of HubSpot and Textron.

Diversification Opportunities for HubSpot and Textron

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between HubSpot and Textron is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and HubSpot 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 HubSpot are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of HubSpot i.e., HubSpot and Textron go up and down completely randomly.

Pair Corralation between HubSpot and Textron

Given the investment horizon of 90 days HubSpot is expected to generate 1.65 times more return on investment than Textron. However, HubSpot is 1.65 times more volatile than Textron. It trades about -0.04 of its potential returns per unit of risk. Textron is currently generating about -0.41 per unit of risk. If you would invest  73,182  in HubSpot on September 24, 2024 and sell it today you would lose (1,686) from holding HubSpot or give up 2.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

HubSpot  vs.  Textron

 Performance 
       Timeline  
HubSpot 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, HubSpot unveiled solid returns over the last few months and may actually be approaching a breakup point.
Textron 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Textron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

HubSpot and Textron Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HubSpot and Textron

The main advantage of trading using opposite HubSpot and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HubSpot position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.
The idea behind HubSpot and Textron 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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