Correlation Between Hewlett Packard and Nokia
Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and Nokia 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 Hewlett Packard and Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hewlett Packard Enterprise and Nokia, you can compare the effects of market volatilities on Hewlett Packard and Nokia 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 Hewlett Packard with a short position of Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Nokia.
Diversification Opportunities for Hewlett Packard and Nokia
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hewlett and Nokia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Nokia go up and down completely randomly.
Pair Corralation between Hewlett Packard and Nokia
Assuming the 90 days horizon Hewlett Packard Enterprise is expected to generate 1.1 times more return on investment than Nokia. However, Hewlett Packard is 1.1 times more volatile than Nokia. It trades about 0.1 of its potential returns per unit of risk. Nokia is currently generating about 0.02 per unit of risk. If you would invest 1,716 in Hewlett Packard Enterprise on September 3, 2024 and sell it today you would earn a total of 271.00 from holding Hewlett Packard Enterprise or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hewlett Packard Enterprise vs. Nokia
Performance |
| Timeline |
| Hewlett Packard Ente |
| Nokia |
Hewlett Packard and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hewlett Packard and Nokia
The main advantage of trading using opposite Hewlett Packard and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewlett Packard position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| Hewlett Packard vs. Pembina Pipeline Corp | Hewlett Packard vs. Thai Beverage Public | Hewlett Packard vs. Austevoll Seafood ASA | Hewlett Packard vs. PRECISION DRILLING P |
| Nokia vs. GAMESTOP | Nokia vs. Penn National Gaming | Nokia vs. Mobilezone Holding AG | Nokia vs. Infrastrutture Wireless Italiane |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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