Correlation Between Hubbell and Schrodinger

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

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

Diversification Opportunities for Hubbell and Schrodinger

-0.38

Correlation Coefficient

Hubbell  Schrodinger

Very good diversification

The 3 months correlation between Hubbell and Schrodinger is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell and Schrodinger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schrodinger and Hubbell 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 Hubbell are associated (or correlated) with Schrodinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schrodinger has no effect on the direction of Hubbell i.e., Hubbell and Schrodinger go up and down completely randomly.

Pair Corralation between Hubbell and Schrodinger

Given the investment horizon of 90 days Hubbell is expected to generate 0.74 times more return on investment than Schrodinger. However, Hubbell is 1.36 times less risky than Schrodinger. It trades about -0.18 of its potential returns per unit of risk. Schrodinger is currently generating about -0.21 per unit of risk. If you would invest  41,574  in Hubbell on February 6, 2024 and sell it today you would lose (3,585) from holding Hubbell or give up 8.62% of portfolio value over 90 days.

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

Hubbell  vs.  Schrodinger

Hubbell

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hubbell are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Hubbell may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Schrodinger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schrodinger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Schrodinger is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hubbell and Schrodinger

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

The idea behind Hubbell and Schrodinger 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.