Correlation Between HP and IShares ESG
Can any of the company-specific risk be diversified away by investing in both HP and IShares ESG 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 IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and iShares ESG Aware, you can compare the effects of market volatilities on HP and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and IShares ESG.
Diversification Opportunities for HP and IShares ESG
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HP and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of HP i.e., HP and IShares ESG go up and down completely randomly.
Pair Corralation between HP and IShares ESG
Considering the 90-day investment horizon HP is expected to generate 1.07 times less return on investment than IShares ESG. In addition to that, HP is 2.08 times more volatile than iShares ESG Aware. It trades about 0.05 of its total potential returns per unit of risk. iShares ESG Aware is currently generating about 0.1 per unit of volatility. If you would invest 8,611 in iShares ESG Aware on August 26, 2024 and sell it today you would earn a total of 4,512 from holding iShares ESG Aware or generate 52.4% 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. iShares ESG Aware
Performance |
| Timeline |
| HP Inc |
| iShares ESG Aware |
HP and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and IShares ESG
The main advantage of trading using opposite HP and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.The idea behind HP Inc and iShares ESG Aware 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.| IShares ESG vs. Morningstar Unconstrained Allocation | IShares ESG vs. High Yield Municipal Fund | IShares ESG vs. Via Renewables | IShares ESG vs. Knife River |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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