Correlation Between Hillenbrand and Graco

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

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

Diversification Opportunities for Hillenbrand and Graco

0.81

Correlation Coefficient

Hillenbrand  Graco

Very poor diversification

The 3 months correlation between Hillenbrand and Graco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Hillenbrand 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 Hillenbrand are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Hillenbrand i.e., Hillenbrand and Graco go up and down completely randomly.

Pair Corralation between Hillenbrand and Graco

Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Graco. In addition to that, Hillenbrand is 1.6 times more volatile than Graco Inc. It trades about -0.01 of its total potential returns per unit of risk. Graco Inc is currently generating about 0.05 per unit of volatility. If you would invest  6,474  in Graco Inc on September 18, 2024 and sell it today you would earn a total of  2,269  from holding Graco Inc or generate 35.05% return on investment over 90 days.

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

Hillenbrand  vs.  Graco Inc

Hillenbrand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Graco Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hillenbrand and Graco

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

The idea behind Hillenbrand and Graco Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.