Correlation Between Hexcel and Heico
Can any of the company-specific risk be diversified away by investing in both Hexcel and Heico 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 Hexcel and Heico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Heico, you can compare the effects of market volatilities on Hexcel and Heico 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 Hexcel with a short position of Heico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Heico.
Diversification Opportunities for Hexcel and Heico
Average diversification
The 3 months correlation between Hexcel and Heico is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Heico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heico and Hexcel 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 Hexcel are associated (or correlated) with Heico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heico has no effect on the direction of Hexcel i.e., Hexcel and Heico go up and down completely randomly.
Pair Corralation between Hexcel and Heico
Considering the 90-day investment horizon Hexcel is expected to under-perform the Heico. In addition to that, Hexcel is 1.49 times more volatile than Heico. It trades about -0.01 of its total potential returns per unit of risk. Heico is currently generating about 0.12 per unit of volatility. If you would invest 16,075 in Heico on January 17, 2024 and sell it today you would earn a total of 3,298 from holding Heico or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Heico
Performance |
| Timeline |
| Hexcel |
| Heico |
Hexcel and Heico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Heico
The main advantage of trading using opposite Hexcel and Heico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, Heico 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 Heico will offset losses from the drop in Heico's long position.The idea behind Hexcel and Heico 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.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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