Correlation Between Fortune Brands and Hardide PLC

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

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

Diversification Opportunities for Fortune Brands and Hardide PLC

-0.76

Correlation Coefficient

Fortune Brands  Hardide PLC

Pay attention - limited upside

The 3 months correlation between Fortune and Hardide is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Fortune Brands i.e., Fortune Brands and Hardide PLC go up and down completely randomly.

Pair Corralation between Fortune Brands and Hardide PLC

Assuming the 90 days trading horizon Fortune Brands is expected to generate 21.02 times less return on investment than Hardide PLC. In addition to that, Fortune Brands is 1.02 times more volatile than Hardide PLC. It trades about 0.01 of its total potential returns per unit of risk. Hardide PLC is currently generating about 0.17 per unit of volatility. If you would invest  575.00  in Hardide PLC on April 25, 2025 and sell it today you would earn a total of  200.00  from holding Hardide PLC or generate 34.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.58%
Values	Daily Returns

Fortune Brands Home  vs.  Hardide PLC

Fortune Brands Home

Risk-Adjusted Performance

Very Weak

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

Hardide PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hardide PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hardide PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortune Brands and Hardide PLC

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

The idea behind Fortune Brands Home and Hardide PLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.