Correlation Between Sturm Ruger and Hexcel
Can any of the company-specific risk be diversified away by investing in both Sturm Ruger and Hexcel 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 Sturm Ruger and Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sturm Ruger and Hexcel, you can compare the effects of market volatilities on Sturm Ruger and Hexcel 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 Sturm Ruger with a short position of Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sturm Ruger and Hexcel.
Diversification Opportunities for Sturm Ruger and Hexcel
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sturm and Hexcel is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel and Sturm Ruger 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 Sturm Ruger are associated (or correlated) with Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Sturm Ruger i.e., Sturm Ruger and Hexcel go up and down completely randomly.
Pair Corralation between Sturm Ruger and Hexcel
Considering the 90-day investment horizon Sturm Ruger is expected to generate 2.58 times less return on investment than Hexcel. But when comparing it to its historical volatility, Sturm Ruger is 1.81 times less risky than Hexcel. It trades about 0.11 of its potential returns per unit of risk. Hexcel is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,180 in Hexcel on November 3, 2024 and sell it today you would earn a total of 340.00 from holding Hexcel or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sturm Ruger vs. Hexcel
Performance |
| Timeline |
| Sturm Ruger |
| Hexcel |
Sturm Ruger and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sturm Ruger and Hexcel
The main advantage of trading using opposite Sturm Ruger and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sturm Ruger position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| Sturm Ruger vs. Ammo Inc | Sturm Ruger vs. Kratos Defense Security | Sturm Ruger vs. VSE Corporation | Sturm Ruger vs. Ammo Preferred |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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