Correlation Between Hawkins and Albemarle
Can any of the company-specific risk be diversified away by investing in both Hawkins and Albemarle 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 Hawkins and Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Albemarle, you can compare the effects of market volatilities on Hawkins and Albemarle 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 Hawkins with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Albemarle.
Diversification Opportunities for Hawkins and Albemarle
Poor diversification
The 3 months correlation between Hawkins and Albemarle is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and Hawkins 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 Hawkins are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Hawkins i.e., Hawkins and Albemarle go up and down completely randomly.
Pair Corralation between Hawkins and Albemarle
Given the investment horizon of 90 days Hawkins is expected to generate 1.13 times more return on investment than Albemarle. However, Hawkins is 1.13 times more volatile than Albemarle. It trades about 0.02 of its potential returns per unit of risk. Albemarle is currently generating about -0.04 per unit of risk. If you would invest 10,625 in Hawkins on November 1, 2024 and sell it today you would earn a total of 18.00 from holding Hawkins or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. Albemarle
Performance |
| Timeline |
| Hawkins |
| Albemarle |
Hawkins and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Albemarle
The main advantage of trading using opposite Hawkins and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| Albemarle vs. Old Dominion Freight | Albemarle vs. East Africa Metals | Albemarle vs. United Guardian | Albemarle vs. Vindicator Silver Lead Mining |
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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