Correlation Between Hillman Solutions and Lancashire Holdings

Can any of the company-specific risk be diversified away by investing in both Hillman Solutions and Lancashire Holdings 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 Lancashire Holdings 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 Lancashire Holdings, you can compare the effects of market volatilities on Hillman Solutions and Lancashire Holdings 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 Lancashire Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillman Solutions and Lancashire Holdings.

Diversification Opportunities for Hillman Solutions and Lancashire Holdings

-0.55

Correlation Coefficient

Hillman Solutions  Lancashire Holdings

Excellent diversification

The 3 months correlation between Hillman and Lancashire is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hillman Solutions Corp and Lancashire Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancashire Holdings 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 Lancashire Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancashire Holdings has no effect on the direction of Hillman Solutions i.e., Hillman Solutions and Lancashire Holdings go up and down completely randomly.

Pair Corralation between Hillman Solutions and Lancashire Holdings

Given the investment horizon of 90 days Hillman Solutions Corp is expected to under-perform the Lancashire Holdings. In addition to that, Hillman Solutions is 1.32 times more volatile than Lancashire Holdings. It trades about -0.2 of its total potential returns per unit of risk. Lancashire Holdings is currently generating about 0.12 per unit of volatility. If you would invest  785.00  in Lancashire Holdings on October 9, 2024 and sell it today you would earn a total of  46.00  from holding Lancashire Holdings or generate 5.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Hillman Solutions Corp  vs.  Lancashire Holdings

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.

Lancashire Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lancashire Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Lancashire Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hillman Solutions and Lancashire Holdings

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

The idea behind Hillman Solutions Corp and Lancashire Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.