Correlation Between Rockwell Automation and Hillenbrand

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

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

Diversification Opportunities for Rockwell Automation and Hillenbrand

0.68

Correlation Coefficient

Rockwell Automation  Hillenbrand

Poor diversification

The 3 months correlation between Rockwell and Hillenbrand is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation i.e., Rockwell Automation and Hillenbrand go up and down completely randomly.

Pair Corralation between Rockwell Automation and Hillenbrand

Considering the 90-day investment horizon Rockwell Automation is expected to generate 0.82 times more return on investment than Hillenbrand. However, Rockwell Automation is 1.22 times less risky than Hillenbrand. It trades about -0.06 of its potential returns per unit of risk. Hillenbrand is currently generating about -0.11 per unit of risk. If you would invest  28,437  in Rockwell Automation on December 30, 2024 and sell it today you would lose (2,574) from holding Rockwell Automation or give up 9.05% of portfolio value over 90 days.

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

Rockwell Automation  vs.  Hillenbrand

Rockwell Automation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rockwell Automation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Hillenbrand

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rockwell Automation and Hillenbrand

The main advantage of trading using opposite Rockwell Automation and Hillenbrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation 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 Rockwell Automation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..