Correlation Between Hillman Solutions and Timken
Can any of the company-specific risk be diversified away by investing in both Hillman Solutions and Timken 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 Hillman Solutions and Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillman Solutions Corp and Timken Company, you can compare the effects of market volatilities on Hillman Solutions and Timken 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 Hillman Solutions with a short position of Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillman Solutions and Timken.
Diversification Opportunities for Hillman Solutions and Timken
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hillman and Timken is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hillman Solutions Corp and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Hillman Solutions 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 Hillman Solutions Corp are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Hillman Solutions i.e., Hillman Solutions and Timken go up and down completely randomly.
Pair Corralation between Hillman Solutions and Timken
Given the investment horizon of 90 days Hillman Solutions Corp is expected to under-perform the Timken. In addition to that, Hillman Solutions is 1.14 times more volatile than Timken Company. It trades about -0.03 of its total potential returns per unit of risk. Timken Company is currently generating about 0.15 per unit of volatility. If you would invest 8,044 in Timken Company on February 23, 2024 and sell it today you would earn a total of 996.00 from holding Timken Company or generate 12.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hillman Solutions Corp vs. Timken Company
Performance |
Timeline |
Hillman Solutions Corp |
Timken Company |
Hillman Solutions and Timken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hillman Solutions and Timken
The main advantage of trading using opposite Hillman Solutions and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillman Solutions position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.Hillman Solutions vs. Kennametal | Hillman Solutions vs. LS Starrett | Hillman Solutions vs. AB SKF | Hillman Solutions vs. Eastern Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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