Correlation Between Hexcel and Gaming
Can any of the company-specific risk be diversified away by investing in both Hexcel and Gaming 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 Hexcel and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Gaming and Leisure, you can compare the effects of market volatilities on Hexcel and Gaming 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 Hexcel with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Gaming.
Diversification Opportunities for Hexcel and Gaming
Significant diversification
The 3 months correlation between Hexcel and Gaming is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and Hexcel 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 Hexcel are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Hexcel i.e., Hexcel and Gaming go up and down completely randomly.
Pair Corralation between Hexcel and Gaming
Assuming the 90 days horizon Hexcel is expected to generate 1.29 times more return on investment than Gaming. However, Hexcel is 1.29 times more volatile than Gaming and Leisure. It trades about 0.07 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.08 per unit of risk. If you would invest 5,534 in Hexcel on November 3, 2024 and sell it today you would earn a total of 716.00 from holding Hexcel or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Gaming and Leisure
Performance |
| Timeline |
| Hexcel |
| Gaming and Leisure |
Hexcel and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Gaming
The main advantage of trading using opposite Hexcel and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Hexcel vs. Media and Games | Hexcel vs. PLAYMATES TOYS | Hexcel vs. American Eagle Outfitters | Hexcel vs. CONTAGIOUS GAMING INC |
| Gaming vs. Crown Castle International | Gaming vs. Equinix | Gaming vs. W P Carey | Gaming vs. Lamar Advertising |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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