Correlation Between HP and Holiday Island
Can any of the company-specific risk be diversified away by investing in both HP and Holiday Island 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 Holiday Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Holiday Island Holdings, you can compare the effects of market volatilities on HP and Holiday Island 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 Holiday Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Holiday Island.
Diversification Opportunities for HP and Holiday Island
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HP and Holiday is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island Holdings 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 Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of HP i.e., HP and Holiday Island go up and down completely randomly.
Pair Corralation between HP and Holiday Island
Considering the 90-day investment horizon HP is expected to generate 1.09 times less return on investment than Holiday Island. But when comparing it to its historical volatility, HP Inc is 9.17 times less risky than Holiday Island. It trades about 0.14 of its potential returns per unit of risk. Holiday Island Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.01 in Holiday Island Holdings on August 28, 2024 and sell it today you would lose (1.14) from holding Holiday Island Holdings or give up 37.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Holiday Island Holdings
Performance |
| Timeline |
| HP Inc |
| Holiday Island Holdings |
HP and Holiday Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Holiday Island
The main advantage of trading using opposite HP and Holiday Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Holiday Island 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 Holiday Island will offset losses from the drop in Holiday Island's long position.The idea behind HP Inc and Holiday Island Holdings 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.| Holiday Island vs. Smart REIT | Holiday Island vs. Phillips Edison Co | Holiday Island vs. Simon Property Group | Holiday Island vs. Inventrust Properties 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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