Correlation Between HP and Jackpot Digital
Can any of the company-specific risk be diversified away by investing in both HP and Jackpot Digital 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 Jackpot Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Jackpot Digital, you can compare the effects of market volatilities on HP and Jackpot Digital 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 Jackpot Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Jackpot Digital.
Diversification Opportunities for HP and Jackpot Digital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and Jackpot is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of HP i.e., HP and Jackpot Digital go up and down completely randomly.
Pair Corralation between HP and Jackpot Digital
Considering the 90-day investment horizon HP Inc is expected to generate 0.45 times more return on investment than Jackpot Digital. However, HP Inc is 2.2 times less risky than Jackpot Digital. It trades about 0.13 of its potential returns per unit of risk. Jackpot Digital is currently generating about -0.08 per unit of risk. If you would invest 3,742 in HP Inc on August 29, 2024 and sell it today you would earn a total of 168.00 from holding HP Inc or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Jackpot Digital
Performance |
| Timeline |
| HP Inc |
| Jackpot Digital |
HP and Jackpot Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Jackpot Digital
The main advantage of trading using opposite HP and Jackpot Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Jackpot Digital 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 Jackpot Digital will offset losses from the drop in Jackpot Digital's long position.The idea behind HP Inc and Jackpot Digital 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.| Jackpot Digital vs. FitLife Brands, Common | Jackpot Digital vs. HUMANA INC | Jackpot Digital vs. SCOR PK | Jackpot Digital vs. Aquagold International |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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