Correlation Between HP and General New
Can any of the company-specific risk be diversified away by investing in both HP and General New 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 General New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and General New York, you can compare the effects of market volatilities on HP and General New 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 General New. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and General New.
Diversification Opportunities for HP and General New
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and General is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and General New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General New York 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 General New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General New York has no effect on the direction of HP i.e., HP and General New go up and down completely randomly.
Pair Corralation between HP and General New
Considering the 90-day investment horizon HP Inc is expected to generate 11.76 times more return on investment than General New. However, HP is 11.76 times more volatile than General New York. It trades about 0.03 of its potential returns per unit of risk. General New York is currently generating about 0.08 per unit of risk. If you would invest 2,998 in HP Inc on September 12, 2024 and sell it today you would earn a total of 452.00 from holding HP Inc or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.96% |
| Values | Daily Returns |
HP Inc vs. General New York
Performance |
| Timeline |
| HP Inc |
| General New York |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HP and General New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and General New
The main advantage of trading using opposite HP and General New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, General New 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 General New will offset losses from the drop in General New's long position.| HP vs. Victory Integrity Smallmid Cap | HP vs. Hilton Worldwide Holdings | HP vs. NVIDIA | HP vs. JPMorgan Chase Co |
| General New vs. Janus Global Technology | General New vs. Hennessy Technology Fund | General New vs. Global Technology Portfolio | General New vs. Invesco Technology Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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