Correlation Between Hillenbrand and Nuscale Power

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

By analyzing existing cross correlation between Hillenbrand and Nuscale Power Corp, you can compare the effects of market volatilities on Hillenbrand and Nuscale Power 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 Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Nuscale Power.

Diversification Opportunities for Hillenbrand and Nuscale Power

0.76

Correlation Coefficient

Hillenbrand  Nuscale Power

Poor diversification

The 3 months correlation between Hillenbrand and Nuscale is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Hillenbrand i.e., Hillenbrand and Nuscale Power go up and down completely randomly.

Pair Corralation between Hillenbrand and Nuscale Power

Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the Nuscale Power. But the stock apears to be less risky and, when comparing its historical volatility, Hillenbrand is 2.92 times less risky than Nuscale Power. The stock trades about -0.11 of its potential returns per unit of risk. The Nuscale Power Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,821  in Nuscale Power Corp on December 30, 2024 and sell it today you would lose (324.00) from holding Nuscale Power Corp or give up 17.79% of portfolio value over 90 days.

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

Hillenbrand  vs.  Nuscale Power Corp

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.

Nuscale Power Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuscale Power Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Nuscale Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hillenbrand and Nuscale Power

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

The idea behind Hillenbrand and Nuscale Power Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.