Correlation Between HP and American National
Can any of the company-specific risk be diversified away by investing in both HP and American National 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 American National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and American National Bankshares, you can compare the effects of market volatilities on HP and American National 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 American National. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and American National.
Diversification Opportunities for HP and American National
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and American National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National 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 American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of HP i.e., HP and American National go up and down completely randomly.
Pair Corralation between HP and American National
If you would invest 3,647 in HP Inc on August 25, 2024 and sell it today you would earn a total of 166.00 from holding HP Inc or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
HP Inc vs. American National Bankshares
Performance |
| Timeline |
| HP Inc |
| American National |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HP and American National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and American National
The main advantage of trading using opposite HP and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, American National 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 American National will offset losses from the drop in American National's long position.The idea behind HP Inc and American National Bankshares 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.| American National vs. First Northwest Bancorp | American National vs. Community West Bancshares | American National vs. First Financial Northwest | American National vs. Great Southern Bancorp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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