Correlation Between ArcelorMittal and Hewlett Packard
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Hewlett Packard 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 ArcelorMittal and Hewlett Packard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and Hewlett Packard Co, you can compare the effects of market volatilities on ArcelorMittal and Hewlett Packard 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 ArcelorMittal with a short position of Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Hewlett Packard.
Diversification Opportunities for ArcelorMittal and Hewlett Packard
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Hewlett is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Hewlett Packard Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard and ArcelorMittal 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 ArcelorMittal SA are associated (or correlated) with Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Hewlett Packard go up and down completely randomly.
Pair Corralation between ArcelorMittal and Hewlett Packard
Assuming the 90 days trading horizon ArcelorMittal SA is expected to generate 1.02 times more return on investment than Hewlett Packard. However, ArcelorMittal is 1.02 times more volatile than Hewlett Packard Co. It trades about 0.12 of its potential returns per unit of risk. Hewlett Packard Co is currently generating about -0.06 per unit of risk. If you would invest 7,343 in ArcelorMittal SA on September 12, 2024 and sell it today you would earn a total of 416.00 from holding ArcelorMittal SA or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA vs. Hewlett Packard Co
Performance |
| Timeline |
| ArcelorMittal SA |
| Hewlett Packard |
ArcelorMittal and Hewlett Packard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Hewlett Packard
The main advantage of trading using opposite ArcelorMittal and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard's long position.| ArcelorMittal vs. Uber Technologies | ArcelorMittal vs. GX AI TECH | ArcelorMittal vs. British American Tobacco | ArcelorMittal vs. Lupatech SA |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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