Correlation Between HP and US Xpress
Can any of the company-specific risk be diversified away by investing in both HP and US Xpress 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 US Xpress into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and US Xpress Enterprises, you can compare the effects of market volatilities on HP and US Xpress 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 US Xpress. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and US Xpress.
Diversification Opportunities for HP and US Xpress
Poor diversification
The 3 months correlation between HP and USX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and US Xpress Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Xpress Enterprises 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 US Xpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Xpress Enterprises has no effect on the direction of HP i.e., HP and US Xpress go up and down completely randomly.
Pair Corralation between HP and US Xpress
If you would invest 3,742 in HP Inc on August 28, 2024 and sell it today you would earn a total of 188.00 from holding HP Inc or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
HP Inc vs. US Xpress Enterprises
Performance |
| Timeline |
| HP Inc |
| US Xpress Enterprises |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HP and US Xpress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and US Xpress
The main advantage of trading using opposite HP and US Xpress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, US Xpress 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 US Xpress will offset losses from the drop in US Xpress' long position.The idea behind HP Inc and US Xpress Enterprises 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.| US Xpress vs. Heartland Express | US Xpress vs. Universal Logistics Holdings | US Xpress vs. Marten Transport | US Xpress vs. Werner Enterprises |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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