Correlation Between Hewlett Packard and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and Ciena Corp 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 Ciena Corp 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 Ciena Corp, you can compare the effects of market volatilities on Hewlett Packard and Ciena Corp 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 Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Ciena Corp.
Diversification Opportunities for Hewlett Packard and Ciena Corp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hewlett and Ciena is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp 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 Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Ciena Corp go up and down completely randomly.
Pair Corralation between Hewlett Packard and Ciena Corp
Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to generate 1.04 times more return on investment than Ciena Corp. However, Hewlett Packard is 1.04 times more volatile than Ciena Corp. It trades about 0.26 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.07 per unit of risk. If you would invest 1,931 in Hewlett Packard Enterprise on August 24, 2024 and sell it today you would earn a total of 243.00 from holding Hewlett Packard Enterprise or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hewlett Packard Enterprise vs. Ciena Corp
Performance |
| Timeline |
| Hewlett Packard Ente |
| Ciena Corp |
Hewlett Packard and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hewlett Packard and Ciena Corp
The main advantage of trading using opposite Hewlett Packard and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewlett Packard position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.| Hewlett Packard vs. Nokia Corp ADR | Hewlett Packard vs. Juniper Networks | Hewlett Packard vs. Ciena Corp | Hewlett Packard vs. Motorola Solutions |
| Ciena Corp vs. Extreme Networks | Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. NETGEAR | Ciena Corp vs. Motorola Solutions |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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