Correlation Between HubSpot and Huntington Ingalls

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

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

Diversification Opportunities for HubSpot and Huntington Ingalls

0.36

Correlation Coefficient

HubSpot  Huntington Ingalls

Weak diversification

The 3 months correlation between HubSpot and Huntington is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and Huntington Ingalls Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls and HubSpot 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 HubSpot are associated (or correlated) with Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of HubSpot i.e., HubSpot and Huntington Ingalls go up and down completely randomly.

Pair Corralation between HubSpot and Huntington Ingalls

Given the investment horizon of 90 days HubSpot is expected to under-perform the Huntington Ingalls. In addition to that, HubSpot is 2.94 times more volatile than Huntington Ingalls Industries. It trades about -0.02 of its total potential returns per unit of risk. Huntington Ingalls Industries is currently generating about 0.1 per unit of volatility. If you would invest  24,531  in Huntington Ingalls Industries on March 7, 2024 and sell it today you would earn a total of  515.00  from holding Huntington Ingalls Industries or generate 2.1% return on investment over 90 days.

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

HubSpot  vs.  Huntington Ingalls Industries

HubSpot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HubSpot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, HubSpot is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Huntington Ingalls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Ingalls Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with HubSpot and Huntington Ingalls

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

The idea behind HubSpot and Huntington Ingalls Industries 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.