Correlation Between HubSpot and Ducommun Incorporated

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

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

Diversification Opportunities for HubSpot and Ducommun Incorporated

0.29

Correlation Coefficient

HubSpot  Ducommun Incorporated

Modest diversification

The 3 months correlation between HubSpot and Ducommun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and Ducommun Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun Incorporated and HubSpot 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 HubSpot are associated (or correlated) with Ducommun Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun Incorporated has no effect on the direction of HubSpot i.e., HubSpot and Ducommun Incorporated go up and down completely randomly.

Pair Corralation between HubSpot and Ducommun Incorporated

Given the investment horizon of 90 days HubSpot is expected to generate 0.86 times more return on investment than Ducommun Incorporated. However, HubSpot is 1.16 times less risky than Ducommun Incorporated. It trades about 0.03 of its potential returns per unit of risk. Ducommun Incorporated is currently generating about -0.09 per unit of risk. If you would invest  69,448  in HubSpot on September 21, 2024 and sell it today you would earn a total of  797.00  from holding HubSpot or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

HubSpot  vs.  Ducommun Incorporated

HubSpot

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, HubSpot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ducommun Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HubSpot and Ducommun Incorporated

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

The idea behind HubSpot and Ducommun Incorporated 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.