Correlation Between Hamilton Beach and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Hamilton Beach and Emerson Radio 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 Hamilton Beach and Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Beach Brands and Emerson Radio, you can compare the effects of market volatilities on Hamilton Beach and Emerson Radio 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 Hamilton Beach with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Beach and Emerson Radio.
Diversification Opportunities for Hamilton Beach and Emerson Radio
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hamilton and Emerson is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and Emerson Radio go up and down completely randomly.
Pair Corralation between Hamilton Beach and Emerson Radio
Considering the 90-day investment horizon Hamilton Beach is expected to generate 3.28 times less return on investment than Emerson Radio. In addition to that, Hamilton Beach is 1.98 times more volatile than Emerson Radio. It trades about 0.02 of its total potential returns per unit of risk. Emerson Radio is currently generating about 0.15 per unit of volatility. If you would invest 52.00 in Emerson Radio on January 19, 2024 and sell it today you would earn a total of 4.00 from holding Emerson Radio or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Beach Brands vs. Emerson Radio
Performance |
| Timeline |
| Hamilton Beach Brands |
| Emerson Radio |
Hamilton Beach and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Beach and Emerson Radio
The main advantage of trading using opposite Hamilton Beach and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Beach position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Hamilton Beach vs. Bassett Furniture Industries | Hamilton Beach vs. Flexsteel Industries | Hamilton Beach vs. Natuzzi SpA | Hamilton Beach vs. La Z Boy Incorporated |
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Check out your portfolio center.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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