Correlation Between HP and IShares Exponential
Can any of the company-specific risk be diversified away by investing in both HP and IShares Exponential 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 IShares Exponential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and iShares Exponential Technologies, you can compare the effects of market volatilities on HP and IShares Exponential 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 IShares Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and IShares Exponential.
Diversification Opportunities for HP and IShares Exponential
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and iShares Exponential Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Exponential 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 IShares Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Exponential has no effect on the direction of HP i.e., HP and IShares Exponential go up and down completely randomly.
Pair Corralation between HP and IShares Exponential
Considering the 90-day investment horizon HP Inc is expected to generate 1.5 times more return on investment than IShares Exponential. However, HP is 1.5 times more volatile than iShares Exponential Technologies. It trades about 0.05 of its potential returns per unit of risk. iShares Exponential Technologies is currently generating about 0.04 per unit of risk. If you would invest 2,640 in HP Inc on August 27, 2024 and sell it today you would earn a total of 1,173 from holding HP Inc or generate 44.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. iShares Exponential Technologi
Performance |
| Timeline |
| HP Inc |
| iShares Exponential |
HP and IShares Exponential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and IShares Exponential
The main advantage of trading using opposite HP and IShares Exponential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, IShares Exponential 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 IShares Exponential will offset losses from the drop in IShares Exponential's long position.The idea behind HP Inc and iShares Exponential Technologies 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.| IShares Exponential vs. SPDR Kensho New | IShares Exponential vs. Global X FinTech | IShares Exponential vs. Invesco SP SmallCap | IShares Exponential vs. iShares Genomics Immunology |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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