Correlation Between HP and 1ST SUMMIT
Can any of the company-specific risk be diversified away by investing in both HP and 1ST SUMMIT 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 1ST SUMMIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on HP and 1ST SUMMIT 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 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and 1ST SUMMIT.
Diversification Opportunities for HP and 1ST SUMMIT
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and 1ST is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP 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 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of HP i.e., HP and 1ST SUMMIT go up and down completely randomly.
Pair Corralation between HP and 1ST SUMMIT
Considering the 90-day investment horizon HP Inc is expected to generate 0.86 times more return on investment than 1ST SUMMIT. However, HP Inc is 1.17 times less risky than 1ST SUMMIT. It trades about 0.04 of its potential returns per unit of risk. 1ST SUMMIT BANCORP is currently generating about -0.08 per unit of risk. If you would invest 2,791 in HP Inc on September 1, 2024 and sell it today you would earn a total of 752.00 from holding HP Inc or generate 26.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. 1ST SUMMIT BANCORP
Performance |
| Timeline |
| HP Inc |
| 1ST SUMMIT BANCORP |
HP and 1ST SUMMIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and 1ST SUMMIT
The main advantage of trading using opposite HP and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, 1ST SUMMIT 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 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT's long position.The idea behind HP Inc and 1ST SUMMIT BANCORP 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.| 1ST SUMMIT vs. Apollo Bancorp | 1ST SUMMIT vs. Oregon Pacific Bancorp | 1ST SUMMIT vs. The Farmers Bank | 1ST SUMMIT vs. Community Bankers |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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