Correlation Between Hurco Companies and DR Horton

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

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

Diversification Opportunities for Hurco Companies and DR Horton

0.21

Correlation Coefficient

Hurco Companies  DR Horton

Modest diversification

The 3 months correlation between Hurco and DHI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and DR Horton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DR Horton and Hurco Companies 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 Hurco Companies are associated (or correlated) with DR Horton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DR Horton has no effect on the direction of Hurco Companies i.e., Hurco Companies and DR Horton go up and down completely randomly.

Pair Corralation between Hurco Companies and DR Horton

Given the investment horizon of 90 days Hurco Companies is expected to under-perform the DR Horton. In addition to that, Hurco Companies is 1.19 times more volatile than DR Horton. It trades about -0.02 of its total potential returns per unit of risk. DR Horton is currently generating about 0.05 per unit of volatility. If you would invest  9,117  in DR Horton on September 29, 2024 and sell it today you would earn a total of  4,911  from holding DR Horton or generate 53.87% return on investment over 90 days.

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

Hurco Companies  vs.  DR Horton

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

DR Horton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DR Horton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hurco Companies and DR Horton

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

The idea behind Hurco Companies and DR Horton 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.