Correlation Between HP and United States

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Can any of the company-specific risk be diversified away by investing in both HP and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and United States Gasoline, you can compare the effects of market volatilities on HP and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and United States.

Diversification Opportunities for HP and United States

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between HP and United is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and United States Gasoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Gasoline 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Gasoline has no effect on the direction of HP i.e., HP and United States go up and down completely randomly.

Pair Corralation between HP and United States

Considering the 90-day investment horizon HP Inc is expected to generate 0.7 times more return on investment than United States. However, HP Inc is 1.42 times less risky than United States. It trades about 0.03 of its potential returns per unit of risk. United States Gasoline is currently generating about 0.01 per unit of risk. If you would invest  2,892  in HP Inc on December 29, 2023 and sell it today you would earn a total of  130.00  from holding HP Inc or generate 4.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  United States Gasoline

 Performance 
       Timeline  
HP Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
United States Gasoline 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United States Gasoline are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, United States sustained solid returns over the last few months and may actually be approaching a breakup point.

HP and United States Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and United States

The main advantage of trading using opposite HP and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.
The idea behind HP Inc and United States Gasoline 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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