Correlation Between Hawkins and Dow
Can any of the company-specific risk be diversified away by investing in both Hawkins and Dow 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 Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Dow Inc, you can compare the effects of market volatilities on Hawkins and Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Dow.
Diversification Opportunities for Hawkins and Dow
Good diversification
The 3 months correlation between Hawkins and Dow is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Hawkins i.e., Hawkins and Dow go up and down completely randomly.
Pair Corralation between Hawkins and Dow
Given the investment horizon of 90 days Hawkins is expected to generate 1.59 times more return on investment than Dow. However, Hawkins is 1.59 times more volatile than Dow Inc. It trades about 0.43 of its potential returns per unit of risk. Dow Inc is currently generating about -0.26 per unit of risk. If you would invest 10,675 in Hawkins on September 1, 2024 and sell it today you would earn a total of 2,776 from holding Hawkins or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. Dow Inc
Performance |
| Timeline |
| Hawkins |
| Dow Inc |
Hawkins and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Dow
The main advantage of trading using opposite Hawkins and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins position performs unexpectedly, Dow 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 Dow will offset losses from the drop in Dow's long position.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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