Correlation Between Virco Manufacturing and Hawkins
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing 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 Virco Manufacturing and Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and Hawkins, you can compare the effects of market volatilities on Virco Manufacturing 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 Virco Manufacturing with a short position of Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and Hawkins.
Diversification Opportunities for Virco Manufacturing and Hawkins
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virco and Hawkins is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Virco Manufacturing 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 Virco Manufacturing 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 Virco Manufacturing i.e., Virco Manufacturing and Hawkins go up and down completely randomly.
Pair Corralation between Virco Manufacturing and Hawkins
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 1.39 times less return on investment than Hawkins. In addition to that, Virco Manufacturing is 1.46 times more volatile than Hawkins. It trades about 0.21 of its total potential returns per unit of risk. Hawkins is currently generating about 0.43 per unit of volatility. If you would invest 10,675 in Hawkins on September 1, 2024 and sell it today you would earn a total of 2,776 from holding Hawkins or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virco Manufacturing vs. Hawkins
Performance |
| Timeline |
| Virco Manufacturing |
| Hawkins |
Virco Manufacturing and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and Hawkins
The main advantage of trading using opposite Virco Manufacturing and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing 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.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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