Correlation Between NewMarket and H B
Can any of the company-specific risk be diversified away by investing in both NewMarket and H B 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 NewMarket and H B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewMarket and H B Fuller, you can compare the effects of market volatilities on NewMarket and H B 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 NewMarket with a short position of H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewMarket and H B.
Diversification Opportunities for NewMarket and H B
Very weak diversification
The 3 months correlation between NewMarket and FUL is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NewMarket and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller and NewMarket 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 NewMarket are associated (or correlated) with H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of NewMarket i.e., NewMarket and H B go up and down completely randomly.
Pair Corralation between NewMarket and H B
Considering the 90-day investment horizon NewMarket is expected to generate 1.26 times less return on investment than H B. But when comparing it to its historical volatility, NewMarket is 1.25 times less risky than H B. It trades about 0.06 of its potential returns per unit of risk. H B Fuller is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,458 in H B Fuller on August 31, 2024 and sell it today you would earn a total of 160.00 from holding H B Fuller or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewMarket vs. H B Fuller
Performance |
| Timeline |
| NewMarket |
| H B Fuller |
NewMarket and H B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewMarket and H B
The main advantage of trading using opposite NewMarket and H B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewMarket position performs unexpectedly, H B 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 H B will offset losses from the drop in H B's long position.| NewMarket vs. H B Fuller | NewMarket vs. Minerals Technologies | NewMarket vs. Quaker Chemical | NewMarket 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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