Correlation Between Hillman Solutions and Timken

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

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

Diversification Opportunities for Hillman Solutions and Timken

0.61

Correlation Coefficient

Hillman Solutions  Timken

Poor diversification

The 3 months correlation between Hillman and Timken is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hillman Solutions Corp and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Hillman Solutions 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 Hillman Solutions Corp are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Hillman Solutions i.e., Hillman Solutions and Timken go up and down completely randomly.

Pair Corralation between Hillman Solutions and Timken

Given the investment horizon of 90 days Hillman Solutions Corp is expected to generate 1.38 times more return on investment than Timken. However, Hillman Solutions is 1.38 times more volatile than Timken Company. It trades about 0.08 of its potential returns per unit of risk. Timken Company is currently generating about 0.1 per unit of risk. If you would invest  731.00  in Hillman Solutions Corp on May 7, 2025 and sell it today you would earn a total of  82.00  from holding Hillman Solutions Corp or generate 11.22% return on investment over 90 days.

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

Hillman Solutions Corp  vs.  Timken Company

Hillman Solutions Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillman Solutions Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting primary indicators, Hillman Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Timken Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Timken Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward-looking signals, Timken reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hillman Solutions and Timken

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

The idea behind Hillman Solutions Corp and Timken Company 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.