Correlation Between Global X and HPQ Silicon
Can any of the company-specific risk be diversified away by investing in both Global X and HPQ Silicon 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 Global X and HPQ Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and HPQ Silicon Resources, you can compare the effects of market volatilities on Global X and HPQ Silicon 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 Global X with a short position of HPQ Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and HPQ Silicon.
Diversification Opportunities for Global X and HPQ Silicon
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and HPQ is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and HPQ Silicon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPQ Silicon Resources and Global X 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 Global X Active are associated (or correlated) with HPQ Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPQ Silicon Resources has no effect on the direction of Global X i.e., Global X and HPQ Silicon go up and down completely randomly.
Pair Corralation between Global X and HPQ Silicon
Assuming the 90 days trading horizon Global X is expected to generate 5.35 times less return on investment than HPQ Silicon. But when comparing it to its historical volatility, Global X Active is 7.8 times less risky than HPQ Silicon. It trades about 0.07 of its potential returns per unit of risk. HPQ Silicon Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21.00 in HPQ Silicon Resources on September 2, 2024 and sell it today you would earn a total of 3.00 from holding HPQ Silicon Resources or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Active vs. HPQ Silicon Resources
Performance |
| Timeline |
| Global X Active |
| HPQ Silicon Resources |
Global X and HPQ Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and HPQ Silicon
The main advantage of trading using opposite Global X and HPQ Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, HPQ Silicon 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 HPQ Silicon will offset losses from the drop in HPQ Silicon's long position.| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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