Correlation Between Heidrick Struggles and Hub

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

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

Diversification Opportunities for Heidrick Struggles and Hub

0.88

Correlation Coefficient

Heidrick Struggles  Hub

Very poor diversification

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

Pair Corralation between Heidrick Struggles and Hub

Given the investment horizon of 90 days Heidrick Struggles International is expected to generate 1.21 times more return on investment than Hub. However, Heidrick Struggles is 1.21 times more volatile than Hub Group. It trades about 0.15 of its potential returns per unit of risk. Hub Group is currently generating about 0.11 per unit of risk. If you would invest  3,747  in Heidrick Struggles International on September 2, 2024 and sell it today you would earn a total of  867.00  from holding Heidrick Struggles International or generate 23.14% return on investment over 90 days.

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

Heidrick Struggles Internation  vs.  Hub Group

Heidrick Struggles

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidrick Struggles International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Heidrick Struggles demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hub Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Hub reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heidrick Struggles and Hub

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

The idea behind Heidrick Struggles International and Hub Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.