Correlation Between Hamilton Beach and Natuzzi SpA

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

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

Diversification Opportunities for Hamilton Beach and Natuzzi SpA

0.09

Correlation Coefficient

Hamilton Beach  Natuzzi SpA

Significant diversification

The 3 months correlation between Hamilton and Natuzzi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and Natuzzi SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natuzzi SpA and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with Natuzzi SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natuzzi SpA has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and Natuzzi SpA go up and down completely randomly.

Pair Corralation between Hamilton Beach and Natuzzi SpA

Considering the 90-day investment horizon Hamilton Beach Brands is expected to generate 0.99 times more return on investment than Natuzzi SpA. However, Hamilton Beach Brands is 1.01 times less risky than Natuzzi SpA. It trades about 0.1 of its potential returns per unit of risk. Natuzzi SpA is currently generating about 0.09 per unit of risk. If you would invest  1,650  in Hamilton Beach Brands on December 29, 2024 and sell it today you would earn a total of  296.00  from holding Hamilton Beach Brands or generate 17.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Hamilton Beach Brands  vs.  Natuzzi SpA

Hamilton Beach Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

Natuzzi SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natuzzi SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Natuzzi SpA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Beach and Natuzzi SpA

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

The idea behind Hamilton Beach Brands and Natuzzi SpA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..