Correlation Between IRobot and Hamilton Beach

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

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

Diversification Opportunities for IRobot and Hamilton Beach

-0.76

Correlation Coefficient

IRobot  Hamilton Beach

Pay attention - limited upside

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

Pair Corralation between IRobot and Hamilton Beach

Given the investment horizon of 90 days iRobot is expected to under-perform the Hamilton Beach. In addition to that, IRobot is 1.85 times more volatile than Hamilton Beach Brands. It trades about -0.11 of its total potential returns per unit of risk. Hamilton Beach Brands is currently generating about 0.16 per unit of volatility. If you would invest  1,267  in Hamilton Beach Brands on February 6, 2024 and sell it today you would earn a total of  1,130  from holding Hamilton Beach Brands or generate 89.19% return on investment over 90 days.

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

iRobot  vs.  Hamilton Beach Brands

iRobot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iRobot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hamilton Beach Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IRobot and Hamilton Beach

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

The idea behind iRobot and Hamilton Beach Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.