Correlation Between AMERICAN and HP
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By analyzing existing cross correlation between AMERICAN HONDA FINANCE and HP Inc, you can compare the effects of market volatilities on AMERICAN 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 AMERICAN with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN and HP.
Diversification Opportunities for AMERICAN and HP
Modest diversification
The 3 months correlation between AMERICAN and HP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN HONDA FINANCE and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and AMERICAN 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 AMERICAN HONDA FINANCE 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 AMERICAN i.e., AMERICAN and HP go up and down completely randomly.
Pair Corralation between AMERICAN and HP
Assuming the 90 days trading horizon AMERICAN HONDA FINANCE is expected to under-perform the HP. But the bond apears to be less risky and, when comparing its historical volatility, AMERICAN HONDA FINANCE is 3.98 times less risky than HP. The bond trades about -0.01 of its potential returns per unit of risk. The HP Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,575 in HP Inc on December 1, 2024 and sell it today you would earn a total of 512.00 from holding HP Inc or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
AMERICAN HONDA FINANCE vs. HP Inc
Performance |
| Timeline |
| AMERICAN HONDA FINANCE |
| HP Inc |
AMERICAN and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERICAN and HP
The main advantage of trading using opposite AMERICAN and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN 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.| AMERICAN vs. SEI Investments | AMERICAN vs. Space Communication | AMERICAN vs. Zhihu Inc ADR | AMERICAN vs. FS KKR Capital |
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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