Correlation Between IES Holdings and Hillcrest Energy
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Hillcrest Energy 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 IES Holdings and Hillcrest Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Hillcrest Energy Technologies, you can compare the effects of market volatilities on IES Holdings and Hillcrest Energy 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 IES Holdings with a short position of Hillcrest Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Hillcrest Energy.
Diversification Opportunities for IES Holdings and Hillcrest Energy
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IES and Hillcrest is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Hillcrest Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillcrest Energy Tec and IES Holdings 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 IES Holdings are associated (or correlated) with Hillcrest Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillcrest Energy Tec has no effect on the direction of IES Holdings i.e., IES Holdings and Hillcrest Energy go up and down completely randomly.
Pair Corralation between IES Holdings and Hillcrest Energy
Given the investment horizon of 90 days IES Holdings is expected to generate 0.6 times more return on investment than Hillcrest Energy. However, IES Holdings is 1.66 times less risky than Hillcrest Energy. It trades about 0.14 of its potential returns per unit of risk. Hillcrest Energy Technologies is currently generating about -0.03 per unit of risk. If you would invest 5,591 in IES Holdings on September 12, 2024 and sell it today you would earn a total of 19,627 from holding IES Holdings or generate 351.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
IES Holdings vs. Hillcrest Energy Technologies
Performance |
Timeline |
IES Holdings |
Hillcrest Energy Tec |
IES Holdings and Hillcrest Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IES Holdings and Hillcrest Energy
The main advantage of trading using opposite IES Holdings and Hillcrest Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Hillcrest Energy 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 Hillcrest Energy will offset losses from the drop in Hillcrest Energy's long position.IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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