Correlation Between Hawkins and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Hawkins and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Microchip Technology, you can compare the effects of market volatilities on Hawkins and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Microchip Technology.
Diversification Opportunities for Hawkins and Microchip Technology
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hawkins and Microchip is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Hawkins i.e., Hawkins and Microchip Technology go up and down completely randomly.
Pair Corralation between Hawkins and Microchip Technology
Given the investment horizon of 90 days Hawkins is expected to generate 1.13 times more return on investment than Microchip Technology. However, Hawkins is 1.13 times more volatile than Microchip Technology. It trades about 0.43 of its potential returns per unit of risk. Microchip Technology is currently generating about -0.12 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. Microchip Technology
Performance |
| Timeline |
| Hawkins |
| Microchip Technology |
Hawkins and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Microchip Technology
The main advantage of trading using opposite Hawkins and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| Microchip Technology vs. NXP Semiconductors NV | Microchip Technology vs. GSI Technology | Microchip Technology vs. MaxLinear | Microchip Technology vs. Texas Instruments Incorporated |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
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