Correlation Between Encore Wire and Hubbell

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

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

Diversification Opportunities for Encore Wire and Hubbell

0.0

Correlation Coefficient

Encore Wire  Hubbell

Pay attention - limited upside

The 3 months correlation between Encore and Hubbell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell and Encore Wire 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 Encore Wire are associated (or correlated) with Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of Encore Wire i.e., Encore Wire and Hubbell go up and down completely randomly.

Pair Corralation between Encore Wire and Hubbell

If you would invest (100.00) in Encore Wire on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Encore Wire or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Encore Wire  vs.  Hubbell

Encore Wire

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encore Wire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Encore Wire is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hubbell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubbell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Encore Wire and Hubbell

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

The idea behind Encore Wire and Hubbell 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.