Correlation Between Donaldson and Helios Technologies

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

By analyzing existing cross correlation between Donaldson and Helios Technologies, you can compare the effects of market volatilities on Donaldson and Helios Technologies 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 Donaldson with a short position of Helios Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donaldson and Helios Technologies.

Diversification Opportunities for Donaldson and Helios Technologies

0.31

Correlation Coefficient

Donaldson  Helios Technologies

Weak diversification

The 3 months correlation between Donaldson and Helios is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Donaldson and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies and Donaldson 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 Donaldson are associated (or correlated) with Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of Donaldson i.e., Donaldson and Helios Technologies go up and down completely randomly.

Pair Corralation between Donaldson and Helios Technologies

Considering the 90-day investment horizon Donaldson is expected to generate 0.59 times more return on investment than Helios Technologies. However, Donaldson is 1.69 times less risky than Helios Technologies. It trades about 0.01 of its potential returns per unit of risk. Helios Technologies is currently generating about -0.2 per unit of risk. If you would invest  6,702  in Donaldson on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Donaldson or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Donaldson  vs.  Helios Technologies

Donaldson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Donaldson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Donaldson is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Helios Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Donaldson and Helios Technologies

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

The idea behind Donaldson and Helios Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.