Correlation Between HP and Activision Blizzard
Can any of the company-specific risk be diversified away by investing in both HP and Activision Blizzard 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 Activision Blizzard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Activision Blizzard, you can compare the effects of market volatilities on HP and Activision Blizzard 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 Activision Blizzard. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Activision Blizzard.
Diversification Opportunities for HP and Activision Blizzard
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and Activision is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard 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 Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of HP i.e., HP and Activision Blizzard go up and down completely randomly.
Pair Corralation between HP and Activision Blizzard
If you would invest 3,742 in HP Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding HP Inc or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
HP Inc vs. Activision Blizzard
Performance |
| Timeline |
| HP Inc |
| Activision Blizzard |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HP and Activision Blizzard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Activision Blizzard
The main advantage of trading using opposite HP and Activision Blizzard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Activision Blizzard 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 Activision Blizzard will offset losses from the drop in Activision Blizzard's long position.The idea behind HP Inc and Activision Blizzard 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.| Activision Blizzard vs. Take Two Interactive Software | Activision Blizzard vs. Nintendo Co ADR | Activision Blizzard vs. NetEase | Activision Blizzard vs. Playtika Holding Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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