Correlation Between HP and DOLLAR
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By analyzing existing cross correlation between HP Inc and DOLLAR GEN P, you can compare the effects of market volatilities on HP and DOLLAR 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 DOLLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and DOLLAR.
Diversification Opportunities for HP and DOLLAR
Very good diversification
The 3 months correlation between HP and DOLLAR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and DOLLAR GEN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR GEN P 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 DOLLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOLLAR GEN P has no effect on the direction of HP i.e., HP and DOLLAR go up and down completely randomly.
Pair Corralation between HP and DOLLAR
Considering the 90-day investment horizon HP Inc is expected to generate 7.09 times more return on investment than DOLLAR. However, HP is 7.09 times more volatile than DOLLAR GEN P. It trades about 0.2 of its potential returns per unit of risk. DOLLAR GEN P is currently generating about -0.06 per unit of risk. If you would invest 3,585 in HP Inc on August 24, 2024 and sell it today you would earn a total of 267.50 from holding HP Inc or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
HP Inc vs. DOLLAR GEN P
Performance |
| Timeline |
| HP Inc |
| DOLLAR GEN P |
HP and DOLLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and DOLLAR
The main advantage of trading using opposite HP and DOLLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, DOLLAR 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 DOLLAR will offset losses from the drop in DOLLAR's long position.The idea behind HP Inc and DOLLAR GEN P 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.| DOLLAR vs. The Coca Cola | DOLLAR vs. JPMorgan Chase Co | DOLLAR vs. Dupont De Nemours | DOLLAR vs. Alcoa 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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