Correlation Between Hillenbrand and Transportation Fund

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

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

Diversification Opportunities for Hillenbrand and Transportation Fund

0.94

Correlation Coefficient

Hillenbrand  Transportation Fund

Almost no diversification

The 3 months correlation between Hillenbrand and Transportation is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and Transportation Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Fund and Hillenbrand 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 Hillenbrand are associated (or correlated) with Transportation Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Fund has no effect on the direction of Hillenbrand i.e., Hillenbrand and Transportation Fund go up and down completely randomly.

Pair Corralation between Hillenbrand and Transportation Fund

Allowing for the 90-day total investment horizon Hillenbrand is expected to generate 2.42 times more return on investment than Transportation Fund. However, Hillenbrand is 2.42 times more volatile than Transportation Fund Investor. It trades about 0.12 of its potential returns per unit of risk. Transportation Fund Investor is currently generating about 0.18 per unit of risk. If you would invest  2,708  in Hillenbrand on September 13, 2024 and sell it today you would earn a total of  628.00  from holding Hillenbrand or generate 23.19% return on investment over 90 days.

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

Hillenbrand  vs.  Transportation Fund Investor

Hillenbrand

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Transportation Fund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Fund Investor are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Transportation Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hillenbrand and Transportation Fund

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

The idea behind Hillenbrand and Transportation Fund Investor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.