Correlation Between H B and Energizer Holdings

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

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

Diversification Opportunities for H B and Energizer Holdings

-0.57

Correlation Coefficient

H B  Energizer Holdings

Excellent diversification

The 3 months correlation between FUL and Energizer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Energizer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energizer Holdings and H B 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 H B Fuller are associated (or correlated) with Energizer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energizer Holdings has no effect on the direction of H B i.e., H B and Energizer Holdings go up and down completely randomly.

Pair Corralation between H B and Energizer Holdings

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Energizer Holdings. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 2.01 times less risky than Energizer Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Energizer Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,352  in Energizer Holdings on September 13, 2024 and sell it today you would earn a total of  334.50  from holding Energizer Holdings or generate 9.98% return on investment over 90 days.

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

H B Fuller  vs.  Energizer Holdings

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 weak 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.

Energizer Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H B and Energizer Holdings

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

The idea behind H B Fuller and Energizer Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.