Correlation Between Preformed Line and Hayward Holdings
Can any of the company-specific risk be diversified away by investing in both Preformed Line and Hayward Holdings 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 Preformed Line and Hayward Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and Hayward Holdings, you can compare the effects of market volatilities on Preformed Line and Hayward Holdings 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 Preformed Line with a short position of Hayward Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and Hayward Holdings.
Diversification Opportunities for Preformed Line and Hayward Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Preformed and Hayward is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Hayward Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hayward Holdings and Preformed Line 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 Preformed Line Products are associated (or correlated) with Hayward Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hayward Holdings has no effect on the direction of Preformed Line i.e., Preformed Line and Hayward Holdings go up and down completely randomly.
Pair Corralation between Preformed Line and Hayward Holdings
Given the investment horizon of 90 days Preformed Line Products is expected to generate 1.21 times more return on investment than Hayward Holdings. However, Preformed Line is 1.21 times more volatile than Hayward Holdings. It trades about 0.13 of its potential returns per unit of risk. Hayward Holdings is currently generating about 0.13 per unit of risk. If you would invest 11,531 in Preformed Line Products on August 31, 2024 and sell it today you would earn a total of 2,088 from holding Preformed Line Products or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preformed Line Products vs. Hayward Holdings
Performance |
| Timeline |
| Preformed Line Products |
| Hayward Holdings |
Preformed Line and Hayward Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and Hayward Holdings
The main advantage of trading using opposite Preformed Line and Hayward Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line position performs unexpectedly, Hayward Holdings 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 Hayward Holdings will offset losses from the drop in Hayward Holdings' long position.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| Hayward Holdings vs. Kimball Electronics | Hayward Holdings vs. Enersys | Hayward Holdings vs. Espey Mfg Electronics | Hayward Holdings vs. Energizer Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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