Correlation Between United States and Hawkins

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

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

Diversification Opportunities for United States and Hawkins

-0.13

Correlation Coefficient

United States  Hawkins

Good diversification

The 3 months correlation between United and Hawkins is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and United States 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 United States Steel are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of United States i.e., United States and Hawkins go up and down completely randomly.

Pair Corralation between United States and Hawkins

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Hawkins. In addition to that, United States is 1.15 times more volatile than Hawkins. It trades about -0.1 of its total potential returns per unit of risk. Hawkins is currently generating about 0.02 per unit of volatility. If you would invest  12,285  in Hawkins on September 19, 2024 and sell it today you would earn a total of  201.00  from holding Hawkins or generate 1.64% return on investment over 90 days.

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

United States Steel  vs.  Hawkins

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hawkins

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United States and Hawkins

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

The idea behind United States Steel and Hawkins 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.