Correlation Between Shenandoah Telecommunicatio and Hubbell Incorporated

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and Hubbell Incorporated

-0.38

Correlation Coefficient

Shenandoah Telecommunicatio  Hubbell Incorporated

Very good diversification

The 3 months correlation between Shenandoah and Hubbell is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Hubbell Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell Incorporated and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Hubbell Incorporated go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Hubbell Incorporated

Assuming the 90 days horizon Shenandoah Telecommunicatio is expected to generate 8.05 times less return on investment than Hubbell Incorporated. In addition to that, Shenandoah Telecommunicatio is 2.31 times more volatile than Hubbell Incorporated. It trades about 0.01 of its total potential returns per unit of risk. Hubbell Incorporated is currently generating about 0.18 per unit of volatility. If you would invest  35,400  in Hubbell Incorporated on August 30, 2024 and sell it today you would earn a total of  8,600  from holding Hubbell Incorporated or generate 24.29% return on investment over 90 days.

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

Shenandoah Telecommunications  vs.  Hubbell Incorporated

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hubbell Incorporated

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hubbell Incorporated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Hubbell Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenandoah Telecommunicatio and Hubbell Incorporated

The main advantage of trading using opposite Shenandoah Telecommunicatio and Hubbell Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Stocks Directory module to find actively traded stocks across global markets.