Correlation Between Hubbell and Lighting Science

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

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

Diversification Opportunities for Hubbell and Lighting Science

-0.45

Correlation Coefficient

Hubbell  Lighting Science

Very good diversification

The 3 months correlation between Hubbell and Lighting is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell and Lighting Science Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lighting Science and Hubbell 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 Hubbell are associated (or correlated) with Lighting Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lighting Science has no effect on the direction of Hubbell i.e., Hubbell and Lighting Science go up and down completely randomly.

Pair Corralation between Hubbell and Lighting Science

If you would invest  37,896  in Hubbell on August 31, 2024 and sell it today you would earn a total of  7,989  from holding Hubbell or generate 21.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Hubbell  vs.  Lighting Science Group

Hubbell

Risk-Adjusted Performance

14 of 100

OK

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

Lighting Science

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hubbell and Lighting Science

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

The idea behind Hubbell and Lighting Science Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.