Correlation Between National Presto and Hexcel

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

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

Diversification Opportunities for National Presto and Hexcel

-0.48

Correlation Coefficient

National Presto  Hexcel

Very good diversification

The 3 months correlation between National and Hexcel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel and National Presto 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 National Presto Industries are associated (or correlated) with Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of National Presto i.e., National Presto and Hexcel go up and down completely randomly.

Pair Corralation between National Presto and Hexcel

Considering the 90-day investment horizon National Presto Industries is expected to generate 0.32 times more return on investment than Hexcel. However, National Presto Industries is 3.17 times less risky than Hexcel. It trades about -0.05 of its potential returns per unit of risk. Hexcel is currently generating about -0.13 per unit of risk. If you would invest  8,292  in National Presto Industries on January 31, 2024 and sell it today you would lose (90.00) from holding National Presto Industries or give up 1.09% of portfolio value over 90 days.

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

National Presto Industries  vs.  Hexcel

National Presto Indu

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Presto Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, National Presto is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Hexcel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexcel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hexcel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with National Presto and Hexcel

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

The idea behind National Presto Industries and Hexcel 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .