Correlation Between Powell Industries and Hayward Holdings
Can any of the company-specific risk be diversified away by investing in both Powell Industries 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 Powell Industries and Hayward Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Hayward Holdings, you can compare the effects of market volatilities on Powell Industries 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 Powell Industries with a short position of Hayward Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Hayward Holdings.
Diversification Opportunities for Powell Industries and Hayward Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Powell and Hayward is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Hayward Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hayward Holdings and Powell Industries 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 Powell Industries 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 Powell Industries i.e., Powell Industries and Hayward Holdings go up and down completely randomly.
Pair Corralation between Powell Industries and Hayward Holdings
Given the investment horizon of 90 days Powell Industries is expected to generate 2.01 times more return on investment than Hayward Holdings. However, Powell Industries is 2.01 times more volatile than Hayward Holdings. It trades about 0.12 of its potential returns per unit of risk. Hayward Holdings is currently generating about 0.06 per unit of risk. If you would invest 2,639 in Powell Industries on August 24, 2024 and sell it today you would earn a total of 26,349 from holding Powell Industries or generate 998.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powell Industries vs. Hayward Holdings
Performance |
| Timeline |
| Powell Industries |
| Hayward Holdings |
Powell Industries and Hayward Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Hayward Holdings
The main advantage of trading using opposite Powell Industries and Hayward Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries 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.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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