Correlation Between Hexcel and Triumph

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

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

Diversification Opportunities for Hexcel and Triumph

0.31

Correlation Coefficient

Hexcel  Triumph

Weak diversification

The 3 months correlation between Hexcel and Triumph is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group and Hexcel 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 Hexcel are associated (or correlated) with Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of Hexcel i.e., Hexcel and Triumph go up and down completely randomly.

Pair Corralation between Hexcel and Triumph

Considering the 90-day investment horizon Hexcel is expected to generate 57.72 times less return on investment than Triumph. But when comparing it to its historical volatility, Hexcel is 89.36 times less risky than Triumph. It trades about 0.23 of its potential returns per unit of risk. Triumph Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,568  in Triumph Group on May 28, 2025 and sell it today you would earn a total of  23,132  from holding Triumph Group or generate 900.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.58%
Values	Daily Returns

Hexcel  vs.  Triumph Group

Hexcel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hexcel are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Hexcel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Triumph Group

Risk-Adjusted Performance

Good

Over the last 90 days Triumph Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hexcel and Triumph

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

The idea behind Hexcel and Triumph Group 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 Stocks Directory module to find actively traded stocks across global markets.