Correlation Between Hillman Solutions and Flow Traders

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

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

Diversification Opportunities for Hillman Solutions and Flow Traders

-0.47

Correlation Coefficient

Hillman Solutions  Flow Traders

Very good diversification

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

Pair Corralation between Hillman Solutions and Flow Traders

Given the investment horizon of 90 days Hillman Solutions is expected to generate 1.53 times less return on investment than Flow Traders. In addition to that, Hillman Solutions is 1.13 times more volatile than Flow Traders. It trades about 0.11 of its total potential returns per unit of risk. Flow Traders is currently generating about 0.18 per unit of volatility. If you would invest  2,340  in Flow Traders on October 25, 2024 and sell it today you would earn a total of  134.00  from holding Flow Traders or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Hillman Solutions Corp  vs.  Flow Traders

Hillman Solutions Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hillman Solutions Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Hillman Solutions is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Flow Traders

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Flow Traders may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hillman Solutions and Flow Traders

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

The idea behind Hillman Solutions Corp and Flow Traders 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 Global Correlations module to find global opportunities by holding instruments from different markets.