Correlation Between Hillenbrand and Rockwell Automation

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Can any of the company-specific risk be diversified away by investing in both Hillenbrand and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and Rockwell Automation, you can compare the effects of market volatilities on Hillenbrand and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Rockwell Automation.

Diversification Opportunities for Hillenbrand and Rockwell Automation

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hillenbrand and Rockwell is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Hillenbrand i.e., Hillenbrand and Rockwell Automation go up and down completely randomly.

Pair Corralation between Hillenbrand and Rockwell Automation

Allowing for the 90-day total investment horizon Hillenbrand is expected to generate 1.54 times more return on investment than Rockwell Automation. However, Hillenbrand is 1.54 times more volatile than Rockwell Automation. It trades about 0.07 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.1 per unit of risk. If you would invest  2,744  in Hillenbrand on September 18, 2024 and sell it today you would earn a total of  334.00  from holding Hillenbrand or generate 12.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hillenbrand  vs.  Rockwell Automation

 Performance 
       Timeline  
Hillenbrand 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 5 (%) 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.
Rockwell Automation 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Rockwell Automation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rockwell Automation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hillenbrand and Rockwell Automation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hillenbrand and Rockwell Automation

The main advantage of trading using opposite Hillenbrand and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.
The idea behind Hillenbrand and Rockwell Automation 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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