Correlation Between Hub and Pitney Bowes

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

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

Diversification Opportunities for Hub and Pitney Bowes

0.15

Correlation Coefficient

Hub  Pitney Bowes

Average diversification

The 3 months correlation between Hub and Pitney is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and Pitney Bowes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pitney Bowes and Hub 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 Hub Group are associated (or correlated) with Pitney Bowes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pitney Bowes has no effect on the direction of Hub i.e., Hub and Pitney Bowes go up and down completely randomly.

Pair Corralation between Hub and Pitney Bowes

Given the investment horizon of 90 days Hub Group is expected to under-perform the Pitney Bowes. But the stock apears to be less risky and, when comparing its historical volatility, Hub Group is 1.04 times less risky than Pitney Bowes. The stock trades about -0.14 of its potential returns per unit of risk. The Pitney Bowes is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Pitney Bowes on July 21, 2024 and sell it today you would earn a total of  5.00  from holding Pitney Bowes or generate 0.7% return on investment over 90 days.

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

Hub Group  vs.  Pitney Bowes

Hub Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hub Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Hub is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pitney Bowes

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pitney Bowes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Pitney Bowes may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Hub and Pitney Bowes

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

The idea behind Hub Group and Pitney Bowes 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.