Correlation Between MasterBrand and Hamilton Beach

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

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

Diversification Opportunities for MasterBrand and Hamilton Beach

0.32

Correlation Coefficient

MasterBrand  Hamilton Beach

Weak diversification

The 3 months correlation between MasterBrand and Hamilton is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands and MasterBrand 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 MasterBrand are associated (or correlated) with Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of MasterBrand i.e., MasterBrand and Hamilton Beach go up and down completely randomly.

Pair Corralation between MasterBrand and Hamilton Beach

Considering the 90-day investment horizon MasterBrand is expected to generate 0.53 times more return on investment than Hamilton Beach. However, MasterBrand is 1.9 times less risky than Hamilton Beach. It trades about 0.09 of its potential returns per unit of risk. Hamilton Beach Brands is currently generating about -0.11 per unit of risk. If you would invest  1,553  in MasterBrand on August 31, 2024 and sell it today you would earn a total of  165.00  from holding MasterBrand or generate 10.62% return on investment over 90 days.

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

MasterBrand  vs.  Hamilton Beach Brands

MasterBrand

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MasterBrand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, MasterBrand may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hamilton Beach Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamilton Beach Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MasterBrand and Hamilton Beach

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

The idea behind MasterBrand and Hamilton Beach Brands 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..