Correlation Between Murata Manufacturing and Hubbell Incorporated

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

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

Diversification Opportunities for Murata Manufacturing and Hubbell Incorporated

-0.21

Correlation Coefficient

Murata Manufacturing  Hubbell Incorporated

Very good diversification

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

Pair Corralation between Murata Manufacturing and Hubbell Incorporated

Assuming the 90 days trading horizon Murata Manufacturing Co is expected to generate 0.94 times more return on investment than Hubbell Incorporated. However, Murata Manufacturing Co is 1.06 times less risky than Hubbell Incorporated. It trades about -0.01 of its potential returns per unit of risk. Hubbell Incorporated is currently generating about -0.18 per unit of risk. If you would invest  1,502  in Murata Manufacturing Co on December 30, 2024 and sell it today you would lose (32.00) from holding Murata Manufacturing Co or give up 2.13% of portfolio value over 90 days.

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

Murata Manufacturing Co  vs.  Hubbell Incorporated

Murata Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Murata Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Murata Manufacturing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hubbell Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubbell Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Murata Manufacturing and Hubbell Incorporated

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

The idea behind Murata Manufacturing Co and Hubbell 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.