Correlation Between Hayward Holdings and RF Industries

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

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

Diversification Opportunities for Hayward Holdings and RF Industries

-0.02

Correlation Coefficient

Hayward Holdings  RF Industries

Good diversification

The 3 months correlation between Hayward and RFIL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hayward Holdings and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries and Hayward Holdings 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 Hayward Holdings are associated (or correlated) with RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Hayward Holdings i.e., Hayward Holdings and RF Industries go up and down completely randomly.

Pair Corralation between Hayward Holdings and RF Industries

Given the investment horizon of 90 days Hayward Holdings is expected to under-perform the RF Industries. But the stock apears to be less risky and, when comparing its historical volatility, Hayward Holdings is 1.38 times less risky than RF Industries. The stock trades about -0.33 of its potential returns per unit of risk. The RF Industries is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  297.00  in RF Industries on March 16, 2024 and sell it today you would earn a total of  49.00  from holding RF Industries or generate 16.5% return on investment over 90 days.

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

Hayward Holdings  vs.  RF Industries

Hayward Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hayward Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

RF Industries

Risk-Adjusted Performance

10 of 100

Modest

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

Pair Trading with Hayward Holdings and RF Industries

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

The idea behind Hayward Holdings and RF Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.