Correlation Between Huntington Ingalls and Advanced Drainage

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

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

Diversification Opportunities for Huntington Ingalls and Advanced Drainage

0.11

Correlation Coefficient

Huntington Ingalls  Advanced Drainage

Average diversification

The 3 months correlation between Huntington and Advanced is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Advanced Drainage Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Drainage Systems and Huntington Ingalls 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 Huntington Ingalls Industries are associated (or correlated) with Advanced Drainage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Drainage Systems has no effect on the direction of Huntington Ingalls i.e., Huntington Ingalls and Advanced Drainage go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Advanced Drainage

Considering the 90-day investment horizon Huntington Ingalls Industries is expected to generate 0.73 times more return on investment than Advanced Drainage. However, Huntington Ingalls Industries is 1.36 times less risky than Advanced Drainage. It trades about 0.14 of its potential returns per unit of risk. Advanced Drainage Systems is currently generating about 0.02 per unit of risk. If you would invest  27,041  in Huntington Ingalls Industries on August 26, 2025 and sell it today you would earn a total of  3,951  from holding Huntington Ingalls Industries or generate 14.61% return on investment over 90 days.

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

Huntington Ingalls Industries  vs.  Advanced Drainage Systems

Huntington Ingalls

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Ingalls Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Huntington Ingalls demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Advanced Drainage Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Advanced Drainage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Huntington Ingalls and Advanced Drainage

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

The idea behind Huntington Ingalls Industries and Advanced Drainage Systems 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.