Correlation Between Ametek and Hillenbrand

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

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

Diversification Opportunities for Ametek and Hillenbrand

0.8

Correlation Coefficient

Ametek  Hillenbrand

Very poor diversification

The 3 months correlation between Ametek and Hillenbrand is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Ametek 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 Ametek Inc are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Ametek i.e., Ametek and Hillenbrand go up and down completely randomly.

Pair Corralation between Ametek and Hillenbrand

Considering the 90-day investment horizon Ametek Inc is expected to generate 0.41 times more return on investment than Hillenbrand. However, Ametek Inc is 2.43 times less risky than Hillenbrand. It trades about -0.08 of its potential returns per unit of risk. Hillenbrand is currently generating about -0.11 per unit of risk. If you would invest  17,618  in Ametek Inc on January 13, 2025 and sell it today you would lose (1,723) from holding Ametek Inc or give up 9.78% of portfolio value over 90 days.

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

Ametek Inc  vs.  Hillenbrand

Ametek Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ametek Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hillenbrand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillenbrand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ametek and Hillenbrand

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

The idea behind Ametek Inc and Hillenbrand 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 Stocks Directory module to find actively traded stocks across global markets.