Correlation Between HP and XL Fleet
Can any of the company-specific risk be diversified away by investing in both HP and XL Fleet 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 XL Fleet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and XL Fleet Corp, you can compare the effects of market volatilities on HP and XL Fleet 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 XL Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and XL Fleet.
Diversification Opportunities for HP and XL Fleet
Excellent diversification
The 3 months correlation between HP and XL Fleet is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and XL Fleet Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Fleet Corp 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 XL Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Fleet Corp has no effect on the direction of HP i.e., HP and XL Fleet go up and down completely randomly.
Pair Corralation between HP and XL Fleet
If you would invest 3,509 in HP Inc on August 31, 2024 and sell it today you would lose (43.00) from holding HP Inc or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
HP Inc vs. XL Fleet Corp
Performance |
| Timeline |
| HP Inc |
| XL Fleet Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HP and XL Fleet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and XL Fleet
The main advantage of trading using opposite HP and XL Fleet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, XL Fleet 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 XL Fleet will offset losses from the drop in XL Fleet's long position.The idea behind HP Inc and XL Fleet Corp 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.| XL Fleet vs. Sealed Air | XL Fleet vs. Codexis | XL Fleet vs. Chemours Co | XL Fleet vs. Hannon Armstrong Sustainable |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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