Correlation Between Hibbett Sports and Hawkins

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

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

Diversification Opportunities for Hibbett Sports and Hawkins

0.36

Correlation Coefficient

Hibbett Sports  Hawkins

Weak diversification

The 3 months correlation between Hibbett and Hawkins is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hibbett Sports and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Hibbett Sports 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 Hibbett Sports 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 Hibbett Sports i.e., Hibbett Sports and Hawkins go up and down completely randomly.

Pair Corralation between Hibbett Sports and Hawkins

Given the investment horizon of 90 days Hibbett Sports is expected to generate 1.21 times more return on investment than Hawkins. However, Hibbett Sports is 1.21 times more volatile than Hawkins. It trades about 0.12 of its potential returns per unit of risk. Hawkins is currently generating about 0.14 per unit of risk. If you would invest  3,867  in Hibbett Sports on June 9, 2024 and sell it today you would earn a total of  4,882  from holding Hibbett Sports or generate 126.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.31%
Values	Daily Returns

Hibbett Sports  vs.  Hawkins

Hibbett Sports

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Hibbett Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Hibbett Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hawkins

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hibbett Sports and Hawkins

The main advantage of trading using opposite Hibbett Sports and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hibbett Sports 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 Hibbett Sports 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.