Correlation Between HP and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both HP and LIFENET INSURANCE 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 HP and LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and LIFENET INSURANCE CO, you can compare the effects of market volatilities on HP and LIFENET INSURANCE 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 HP with a short position of LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and LIFENET INSURANCE.
Diversification Opportunities for HP and LIFENET INSURANCE
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and LIFENET is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE and HP 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 HP Inc are associated (or correlated) with LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of HP i.e., HP and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between HP and LIFENET INSURANCE
Assuming the 90 days horizon HP is expected to generate 128.12 times less return on investment than LIFENET INSURANCE. But when comparing it to its historical volatility, HP Inc is 1.77 times less risky than LIFENET INSURANCE. It trades about 0.0 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,070 in LIFENET INSURANCE CO on October 20, 2024 and sell it today you would earn a total of 80.00 from holding LIFENET INSURANCE CO or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| HP Inc |
| LIFENET INSURANCE |
HP and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and LIFENET INSURANCE
The main advantage of trading using opposite HP and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.The idea behind HP Inc and LIFENET INSURANCE CO 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.| LIFENET INSURANCE vs. British American Tobacco | LIFENET INSURANCE vs. IMPERIAL TOBACCO | LIFENET INSURANCE vs. CRISPR Therapeutics AG | LIFENET INSURANCE vs. INTERNET INJPADR 1 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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