Correlation Between Alphabet and Hexcel Corp

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Can any of the company-specific risk be diversified away by investing in both Alphabet and Hexcel Corp 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 Alphabet and Hexcel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Cl C and Hexcel Corp, you can compare the effects of market volatilities on Alphabet and Hexcel Corp 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 Alphabet with a short position of Hexcel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Hexcel Corp.

Diversification Opportunities for Alphabet and Hexcel Corp

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Alphabet and Hexcel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Cl C and Hexcel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel Corp and Alphabet 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 Alphabet Cl C are associated (or correlated) with Hexcel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel Corp has no effect on the direction of Alphabet i.e., Alphabet and Hexcel Corp go up and down completely randomly.

Pair Corralation between Alphabet and Hexcel Corp

Given the investment horizon of 90 days Alphabet Cl C is expected to generate 0.85 times more return on investment than Hexcel Corp. However, Alphabet Cl C is 1.18 times less risky than Hexcel Corp. It trades about -0.3 of its potential returns per unit of risk. Hexcel Corp is currently generating about -0.33 per unit of risk. If you would invest  11,034  in Alphabet Cl C on June 28, 2022 and sell it today you would lose (1,153)  from holding Alphabet Cl C or give up 10.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Alphabet Cl C  vs.  Hexcel Corp

 Performance (%) 
       Timeline  
Alphabet Cl C 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alphabet Price Channel

Hexcel Corp 
Hexcel Performance
0 of 100
Over the last 90 days Hexcel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Hexcel Corp is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Hexcel Price Channel

Alphabet and Hexcel Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and Hexcel Corp

The main advantage of trading using opposite Alphabet and Hexcel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Hexcel Corp 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 Corp will offset losses from the drop in Hexcel Corp's long position.
Alphabet vs. Clearwater Paper Corp
The idea behind Alphabet Cl C and Hexcel Corp 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.
Hexcel Corp vs. Kibush Capital Corp
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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