Correlation Between Hawkins and American Vanguard
Can any of the company-specific risk be diversified away by investing in both Hawkins and American Vanguard 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 Hawkins and American Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and American Vanguard, you can compare the effects of market volatilities on Hawkins and American Vanguard 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 Hawkins with a short position of American Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and American Vanguard.
Diversification Opportunities for Hawkins and American Vanguard
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hawkins and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Hawkins 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 Hawkins are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of Hawkins i.e., Hawkins and American Vanguard go up and down completely randomly.
Pair Corralation between Hawkins and American Vanguard
Given the investment horizon of 90 days Hawkins is expected to under-perform the American Vanguard. But the stock apears to be less risky and, when comparing its historical volatility, Hawkins is 1.4 times less risky than American Vanguard. The stock trades about -0.28 of its potential returns per unit of risk. The American Vanguard is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 544.00 in American Vanguard on October 12, 2024 and sell it today you would lose (69.00) from holding American Vanguard or give up 12.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hawkins vs. American Vanguard
Performance |
Timeline |
Hawkins |
American Vanguard |
Hawkins and American Vanguard Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hawkins and American Vanguard
The main advantage of trading using opposite Hawkins and American Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins position performs unexpectedly, American Vanguard 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 American Vanguard will offset losses from the drop in American Vanguard's long position.Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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