Correlation Between HP and Anfield Resources
Can any of the company-specific risk be diversified away by investing in both HP and Anfield Resources 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 Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Anfield Resources, you can compare the effects of market volatilities on HP and Anfield Resources 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 Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Anfield Resources.
Diversification Opportunities for HP and Anfield Resources
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HP and Anfield is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources 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 Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of HP i.e., HP and Anfield Resources go up and down completely randomly.
Pair Corralation between HP and Anfield Resources
Considering the 90-day investment horizon HP Inc is expected to generate 0.23 times more return on investment than Anfield Resources. However, HP Inc is 4.37 times less risky than Anfield Resources. It trades about 0.13 of its potential returns per unit of risk. Anfield Resources is currently generating about -0.04 per unit of risk. If you would invest 3,742 in HP Inc on August 29, 2024 and sell it today you would earn a total of 168.00 from holding HP Inc or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Anfield Resources
Performance |
| Timeline |
| HP Inc |
| Anfield Resources |
HP and Anfield Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Anfield Resources
The main advantage of trading using opposite HP and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Anfield Resources 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 Anfield Resources will offset losses from the drop in Anfield Resources' long position.The idea behind HP Inc and Anfield Resources 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.| Anfield Resources vs. Petroleo Brasileiro Petrobras | Anfield Resources vs. Equinor ASA ADR | Anfield Resources vs. Eni SpA ADR | Anfield Resources vs. YPF Sociedad Anonima |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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