Correlation Between Hawkins and Northern Technologies
Can any of the company-specific risk be diversified away by investing in both Hawkins and Northern Technologies 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 Northern Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Northern Technologies, you can compare the effects of market volatilities on Hawkins and Northern Technologies 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 Northern Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Northern Technologies.
Diversification Opportunities for Hawkins and Northern Technologies
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hawkins and Northern is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Northern Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Technologies 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 Northern Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Technologies has no effect on the direction of Hawkins i.e., Hawkins and Northern Technologies go up and down completely randomly.
Pair Corralation between Hawkins and Northern Technologies
Given the investment horizon of 90 days Hawkins is expected to generate 0.83 times more return on investment than Northern Technologies. However, Hawkins is 1.21 times less risky than Northern Technologies. It trades about 0.43 of its potential returns per unit of risk. Northern Technologies is currently generating about 0.15 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. Northern Technologies
Performance |
| Timeline |
| Hawkins |
| Northern Technologies |
Hawkins and Northern Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Northern Technologies
The main advantage of trading using opposite Hawkins and Northern Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins position performs unexpectedly, Northern Technologies 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 Northern Technologies will offset losses from the drop in Northern Technologies' long position.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| Northern Technologies vs. Innospec | Northern Technologies vs. H B Fuller | Northern Technologies vs. Quaker Chemical | Northern Technologies vs. Minerals Technologies |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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