Correlation Between HP and FEDEX
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By analyzing existing cross correlation between HP Inc and FEDEX P 44, you can compare the effects of market volatilities on HP and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and FEDEX.
Diversification Opportunities for HP and FEDEX
Excellent diversification
The 3 months correlation between HP and FEDEX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and FEDEX P 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 44 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 44 has no effect on the direction of HP i.e., HP and FEDEX go up and down completely randomly.
Pair Corralation between HP and FEDEX
Considering the 90-day investment horizon HP Inc is expected to under-perform the FEDEX. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 2.15 times less risky than FEDEX. The stock trades about -0.09 of its potential returns per unit of risk. The FEDEX P 44 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,284 in FEDEX P 44 on August 30, 2024 and sell it today you would lose (53.00) from holding FEDEX P 44 or give up 0.64% 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. FEDEX P 44
Performance |
| Timeline |
| HP Inc |
| FEDEX P 44 |
HP and FEDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and FEDEX
The main advantage of trading using opposite HP and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX's long position.The idea behind HP Inc and FEDEX P 44 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.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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