Correlation Between Avantor and H B

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

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

Diversification Opportunities for Avantor and H B

0.76

Correlation Coefficient

Avantor  H B

Poor diversification

The 3 months correlation between Avantor and FUL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avantor and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller and Avantor 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 Avantor are associated (or correlated) with H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Avantor i.e., Avantor and H B go up and down completely randomly.

Pair Corralation between Avantor and H B

Given the investment horizon of 90 days Avantor is expected to generate 2.0 times less return on investment than H B. In addition to that, Avantor is 1.26 times more volatile than H B Fuller. It trades about 0.01 of its total potential returns per unit of risk. H B Fuller is currently generating about 0.03 per unit of volatility. If you would invest  6,472  in H B Fuller on August 31, 2024 and sell it today you would earn a total of  1,146  from holding H B Fuller or generate 17.71% return on investment over 90 days.

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

Avantor  vs.  H B Fuller

Avantor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with Avantor and H B

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

The idea behind Avantor and H B Fuller 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.