Correlation Between Hewlett Packard and Mondelez International
Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and Mondelez International 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 Hewlett Packard and Mondelez International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hewlett Packard Co and Mondelez International, you can compare the effects of market volatilities on Hewlett Packard and Mondelez International 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 Hewlett Packard with a short position of Mondelez International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Mondelez International.
Diversification Opportunities for Hewlett Packard and Mondelez International
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hewlett and Mondelez is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Co and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International and Hewlett Packard 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 Hewlett Packard Co are associated (or correlated) with Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Mondelez International go up and down completely randomly.
Pair Corralation between Hewlett Packard and Mondelez International
Assuming the 90 days trading horizon Hewlett Packard Co is expected to generate 1.23 times more return on investment than Mondelez International. However, Hewlett Packard is 1.23 times more volatile than Mondelez International. It trades about 0.15 of its potential returns per unit of risk. Mondelez International is currently generating about 0.02 per unit of risk. If you would invest 13,751 in Hewlett Packard Co on August 27, 2024 and sell it today you would earn a total of 8,466 from holding Hewlett Packard Co or generate 61.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.89% |
| Values | Daily Returns |
Hewlett Packard Co vs. Mondelez International
Performance |
| Timeline |
| Hewlett Packard |
| Mondelez International |
Hewlett Packard and Mondelez International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hewlett Packard and Mondelez International
The main advantage of trading using opposite Hewlett Packard and Mondelez International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewlett Packard position performs unexpectedly, Mondelez International 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 Mondelez International will offset losses from the drop in Mondelez International's long position.| Hewlett Packard vs. BTG Pactual Logstica | Hewlett Packard vs. Plano Plano Desenvolvimento | Hewlett Packard vs. Cable One | Hewlett Packard vs. ATMA Participaes SA |
| Mondelez International vs. Hewlett Packard Co | Mondelez International vs. Zoom Video Communications | Mondelez International vs. BTG Pactual Logstica | Mondelez International vs. Plano Plano Desenvolvimento |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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