Correlation Between Hubbell Incorporated and Amphenol

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

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

Diversification Opportunities for Hubbell Incorporated and Amphenol

0.81

Correlation Coefficient

Hubbell Incorporated  Amphenol

Very poor diversification

The 3 months correlation between Hubbell and Amphenol is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell Incorporated and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and Hubbell Incorporated 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 Hubbell Incorporated are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Hubbell Incorporated i.e., Hubbell Incorporated and Amphenol go up and down completely randomly.

Pair Corralation between Hubbell Incorporated and Amphenol

Assuming the 90 days trading horizon Hubbell Incorporated is expected to generate 2.62 times less return on investment than Amphenol. In addition to that, Hubbell Incorporated is 1.25 times more volatile than Amphenol. It trades about 0.05 of its total potential returns per unit of risk. Amphenol is currently generating about 0.16 per unit of volatility. If you would invest  5,946  in Amphenol on October 11, 2024 and sell it today you would earn a total of  932.00  from holding Amphenol or generate 15.67% return on investment over 90 days.

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

Hubbell Incorporated  vs.  Amphenol

Hubbell Incorporated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubbell Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hubbell Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amphenol

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amphenol reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hubbell Incorporated and Amphenol

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

The idea behind Hubbell Incorporated and Amphenol 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.