Correlation Between Gorman Rupp and Hillenbrand

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

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

Diversification Opportunities for Gorman Rupp and Hillenbrand

0.4

Correlation Coefficient

Gorman Rupp  Hillenbrand

Very weak diversification

The 3 months correlation between Gorman and Hillenbrand is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Gorman Rupp 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 Gorman Rupp are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Gorman Rupp i.e., Gorman Rupp and Hillenbrand go up and down completely randomly.

Pair Corralation between Gorman Rupp and Hillenbrand

Considering the 90-day investment horizon Gorman Rupp is expected to generate 0.58 times more return on investment than Hillenbrand. However, Gorman Rupp is 1.72 times less risky than Hillenbrand. It trades about -0.06 of its potential returns per unit of risk. Hillenbrand is currently generating about -0.11 per unit of risk. If you would invest  3,768  in Gorman Rupp on December 30, 2024 and sell it today you would lose (236.00) from holding Gorman Rupp or give up 6.26% of portfolio value over 90 days.

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

Gorman Rupp  vs.  Hillenbrand

Gorman Rupp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gorman Rupp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gorman Rupp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Hillenbrand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillenbrand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Gorman Rupp and Hillenbrand

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

The idea behind Gorman Rupp and Hillenbrand 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.