Correlation Between Nordson and Hillenbrand

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

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

Diversification Opportunities for Nordson and Hillenbrand

-0.02

Correlation Coefficient

Nordson  Hillenbrand

Good diversification

The 3 months correlation between Nordson and Hillenbrand is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordson and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Nordson 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 Nordson are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Nordson i.e., Nordson and Hillenbrand go up and down completely randomly.

Pair Corralation between Nordson and Hillenbrand

Given the investment horizon of 90 days Nordson is expected to under-perform the Hillenbrand. In addition to that, Nordson is 1.32 times more volatile than Hillenbrand. It trades about -0.45 of its total potential returns per unit of risk. Hillenbrand is currently generating about -0.17 per unit of volatility. If you would invest  3,272  in Hillenbrand on October 6, 2024 and sell it today you would lose (187.00) from holding Hillenbrand or give up 5.72% of portfolio value over 90 days.

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

Nordson  vs.  Hillenbrand

Nordson

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hillenbrand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordson and Hillenbrand

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

The idea behind Nordson and Hillenbrand 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.