Correlation Between Alphabet and Hayward Holdings

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

By analyzing existing cross correlation between Alphabet Inc Class C and Hayward Holdings, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Hayward Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Hayward Holdings.

Diversification Opportunities for Alphabet and Hayward Holdings

-0.4

Correlation Coefficient

Alphabet  Hayward Holdings

Very good diversification

The 3 months correlation between Alphabet and Hayward is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Hayward Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hayward Holdings and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Hayward Holdings go up and down completely randomly.

Pair Corralation between Alphabet and Hayward Holdings

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Hayward Holdings. In addition to that, Alphabet is 1.06 times more volatile than Hayward Holdings. It trades about -0.2 of its total potential returns per unit of risk. Hayward Holdings is currently generating about -0.11 per unit of volatility. If you would invest  1,522  in Hayward Holdings on November 28, 2024 and sell it today you would lose (80.50) from holding Hayward Holdings or give up 5.29% of portfolio value over 90 days.

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

Alphabet Inc Class C  vs.  Hayward Holdings

Alphabet Class C

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hayward Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hayward Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Alphabet and Hayward Holdings

The main advantage of trading using opposite Alphabet and Hayward Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.

The idea behind Alphabet Inc Class C and Hayward Holdings 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.