Correlation Between HP and T REX
Can any of the company-specific risk be diversified away by investing in both HP and T REX 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 T REX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and T REX 2X Long, you can compare the effects of market volatilities on HP and T REX 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 T REX. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and T REX.
Diversification Opportunities for HP and T REX
Very good diversification
The 3 months correlation between HP and NFLU is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and T REX 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T REX 2X 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 T REX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T REX 2X has no effect on the direction of HP i.e., HP and T REX go up and down completely randomly.
Pair Corralation between HP and T REX
Considering the 90-day investment horizon HP Inc is expected to under-perform the T REX. In addition to that, HP is 1.01 times more volatile than T REX 2X Long. It trades about -0.01 of its total potential returns per unit of risk. T REX 2X Long is currently generating about 0.56 per unit of volatility. If you would invest 2,740 in T REX 2X Long on September 3, 2024 and sell it today you would earn a total of 1,060 from holding T REX 2X Long or generate 38.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. T REX 2X Long
Performance |
| Timeline |
| HP Inc |
| T REX 2X |
HP and T REX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and T REX
The main advantage of trading using opposite HP and T REX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, T REX 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 T REX will offset losses from the drop in T REX's long position.The idea behind HP Inc and T REX 2X Long 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.| T REX vs. ProShares Ultra SP500 | T REX vs. Direxion Daily SP500 | T REX vs. ProShares Ultra QQQ | T REX vs. Direxion Daily SP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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