Correlation Between Red Cat and HP
Can any of the company-specific risk be diversified away by investing in both Red Cat and HP 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 Red Cat and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and HP Inc, you can compare the effects of market volatilities on Red Cat and HP 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 Red Cat with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and HP.
Diversification Opportunities for Red Cat and HP
Very good diversification
The 3 months correlation between Red and HP is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Red Cat 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 Red Cat Holdings are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Red Cat i.e., Red Cat and HP go up and down completely randomly.
Pair Corralation between Red Cat and HP
Given the investment horizon of 90 days Red Cat Holdings is expected to under-perform the HP. In addition to that, Red Cat is 7.66 times more volatile than HP Inc. It trades about -0.02 of its total potential returns per unit of risk. HP Inc is currently generating about -0.11 per unit of volatility. If you would invest 3,345 in HP Inc on November 9, 2024 and sell it today you would lose (85.00) from holding HP Inc or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. HP Inc
Performance |
| Timeline |
| Red Cat Holdings |
| HP Inc |
Red Cat and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and HP
The main advantage of trading using opposite Red Cat and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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