Correlation Between Linde Plc and Hawkins
Can any of the company-specific risk be diversified away by investing in both Linde Plc and Hawkins 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 Linde Plc and Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Hawkins, you can compare the effects of market volatilities on Linde Plc and Hawkins 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 Linde Plc with a short position of Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Hawkins.
Diversification Opportunities for Linde Plc and Hawkins
Average diversification
The 3 months correlation between Linde and Hawkins is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Linde Plc 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 Linde plc Ordinary are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Linde Plc i.e., Linde Plc and Hawkins go up and down completely randomly.
Pair Corralation between Linde Plc and Hawkins
Considering the 90-day investment horizon Linde plc Ordinary is expected to generate 0.3 times more return on investment than Hawkins. However, Linde plc Ordinary is 3.33 times less risky than Hawkins. It trades about -0.32 of its potential returns per unit of risk. Hawkins is currently generating about -0.33 per unit of risk. If you would invest 43,850 in Linde plc Ordinary on October 13, 2024 and sell it today you would lose (2,435) from holding Linde plc Ordinary or give up 5.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Hawkins
Performance |
| Timeline |
| Linde plc Ordinary |
| Hawkins |
Linde Plc and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Hawkins
The main advantage of trading using opposite Linde Plc and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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