Correlation Between Canadian Pacific and Hillman Solutions

Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Hillman Solutions 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 Canadian Pacific and Hillman Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian Pacific Railway and Hillman Solutions Corp, you can compare the effects of market volatilities on Canadian Pacific and Hillman Solutions 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 Canadian Pacific with a short position of Hillman Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Hillman Solutions.

Diversification Opportunities for Canadian Pacific and Hillman Solutions

-0.13

Correlation Coefficient

Canadian Pacific  Hillman Solutions

Good diversification

The 3 months correlation between Canadian and Hillman is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Hillman Solutions Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillman Solutions Corp and Canadian Pacific 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 Canadian Pacific Railway are associated (or correlated) with Hillman Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillman Solutions Corp has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Hillman Solutions go up and down completely randomly.

Pair Corralation between Canadian Pacific and Hillman Solutions

Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to generate 0.63 times more return on investment than Hillman Solutions. However, Canadian Pacific Railway is 1.6 times less risky than Hillman Solutions. It trades about -0.23 of its potential returns per unit of risk. Hillman Solutions Corp is currently generating about -0.46 per unit of risk. If you would invest  7,617  in Canadian Pacific Railway on October 1, 2024 and sell it today you would lose (361.00) from holding Canadian Pacific Railway or give up 4.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian Pacific Railway  vs.  Hillman Solutions Corp

Canadian Pacific Railway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Pacific Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hillman Solutions Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hillman Solutions Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Hillman Solutions is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Canadian Pacific and Hillman Solutions

The main advantage of trading using opposite Canadian Pacific and Hillman Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Hillman Solutions 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 Hillman Solutions will offset losses from the drop in Hillman Solutions' long position.

The idea behind Canadian Pacific Railway and Hillman Solutions Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.