Correlation Between Hilton Food and Ecofin Global

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

By analyzing existing cross correlation between Hilton Food Group and Ecofin Global Utilities, you can compare the effects of market volatilities on Hilton Food and Ecofin Global 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 Hilton Food with a short position of Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Ecofin Global.

Diversification Opportunities for Hilton Food and Ecofin Global

-0.47

Correlation Coefficient

Hilton Food  Ecofin Global

Very good diversification

The 3 months correlation between Hilton and Ecofin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities and Hilton Food 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 Hilton Food Group are associated (or correlated) with Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Hilton Food i.e., Hilton Food and Ecofin Global go up and down completely randomly.

Pair Corralation between Hilton Food and Ecofin Global

Assuming the 90 days trading horizon Hilton Food is expected to generate 2.27 times less return on investment than Ecofin Global. In addition to that, Hilton Food is 1.45 times more volatile than Ecofin Global Utilities. It trades about 0.02 of its total potential returns per unit of risk. Ecofin Global Utilities is currently generating about 0.06 per unit of volatility. If you would invest  18,004  in Ecofin Global Utilities on September 1, 2024 and sell it today you would earn a total of  1,296  from holding Ecofin Global Utilities or generate 7.2% return on investment over 90 days.

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

Hilton Food Group  vs.  Ecofin Global Utilities

Hilton Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ecofin Global Utilities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofin Global Utilities are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ecofin Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hilton Food and Ecofin Global

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

The idea behind Hilton Food Group and Ecofin Global Utilities 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.