Correlation Between Seagate Technology and HP
Can any of the company-specific risk be diversified away by investing in both Seagate Technology 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 Seagate Technology and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagate Technology PLC and HP Inc, you can compare the effects of market volatilities on Seagate Technology 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 Seagate Technology with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagate Technology and HP.
Diversification Opportunities for Seagate Technology and HP
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seagate and HP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Seagate Technology 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 Seagate Technology PLC 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 Seagate Technology i.e., Seagate Technology and HP go up and down completely randomly.
Pair Corralation between Seagate Technology and HP
Considering the 90-day investment horizon Seagate Technology PLC is expected to under-perform the HP. But the stock apears to be less risky and, when comparing its historical volatility, Seagate Technology PLC is 1.21 times less risky than HP. The stock trades about -0.06 of its potential returns per unit of risk. The HP Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,742 in HP Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding HP Inc or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seagate Technology PLC vs. HP Inc
Performance |
| Timeline |
| Seagate Technology PLC |
| HP Inc |
Seagate Technology and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seagate Technology and HP
The main advantage of trading using opposite Seagate Technology and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology 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.| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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