Two Equities Correlation Analysis

This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.

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Can any of the company-specific risk be diversified away by investing in both Hamilton Beach and DOW at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Hamilton Beach and DOW into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Hamilton Beach and DOW

0.7
Correlation
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DOW

Poor diversification

The 3 months correlation between Hamilton and DOW is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands Holding and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Hamilton Beach i.e. Hamilton Beach and DOW go up and down completely randomly.
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Pair Corralation between Hamilton Beach and DOW

Considering 30-days investment horizon, Hamilton Beach Brands is expected to generate 2.28 times more return on investment than DOW. However, Hamilton Beach is 2.28 times more volatile than DOW. It trades about 0.05 of its potential returns per unit of risk. DOW is currently generating about 0.07 per unit of risk. If you would invest  1,126  in Hamilton Beach Brands on May 7, 2020 and sell it today you would earn a total of  77.00  from holding Hamilton Beach Brands or generate 6.84% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hamilton Beach Brands Holding   vs.  DOW

 Performance (%) 
      Timeline 
 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Bollinger Bands module to use bollinger bands indicator to analyze target price for a given investing horizon.


 
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