Correlation Between Hawkins and Oil Dri

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

By analyzing existing cross correlation between Hawkins and Oil Dri, you can compare the effects of market volatilities on Hawkins and Oil Dri 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 Oil Dri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Oil Dri.

Diversification Opportunities for Hawkins and Oil Dri

-0.43

Correlation Coefficient

Hawkins  Oil Dri

Very good diversification

The 3 months correlation between Hawkins and Oil is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Oil Dri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Dri 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 Oil Dri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Dri has no effect on the direction of Hawkins i.e., Hawkins and Oil Dri go up and down completely randomly.

Pair Corralation between Hawkins and Oil Dri

Given the investment horizon of 90 days Hawkins is expected to under-perform the Oil Dri. In addition to that, Hawkins is 1.14 times more volatile than Oil Dri. It trades about -0.1 of its total potential returns per unit of risk. Oil Dri is currently generating about 0.04 per unit of volatility. If you would invest  4,379  in Oil Dri on December 27, 2024 and sell it today you would earn a total of  195.00  from holding Oil Dri or generate 4.45% return on investment over 90 days.

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

Hawkins  vs.  Oil Dri

Hawkins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Oil Dri

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Dri are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Oil Dri is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hawkins and Oil Dri

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

The idea behind Hawkins and Oil Dri 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.