Correlation Between HP and Duck Creek

Can any of the company-specific risk be diversified away by investing in both HP and Duck Creek 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 Duck Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HP Inc and Duck Creek Technologies, you can compare the effects of market volatilities on HP and Duck Creek 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 Duck Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Duck Creek.

Diversification Opportunities for HP and Duck Creek

-0.18

Correlation Coefficient

HP  Duck Creek

Good diversification

The 3 months correlation between HP and Duck is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Duck Creek Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duck Creek Technologies 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 Duck Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duck Creek Technologies has no effect on the direction of HP i.e., HP and Duck Creek go up and down completely randomly.

Pair Corralation between HP and Duck Creek

Considering the 90-day investment horizon HP Inc is expected to under-perform the Duck Creek. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 34.42 times less risky than Duck Creek. The stock trades about -0.02 of its potential returns per unit of risk. The Duck Creek Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Duck Creek Technologies on January 25, 2024 and sell it today you would earn a total of  309.00  from holding Duck Creek Technologies or generate 19.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.17%
Values	Daily Returns

HP Inc  vs.  Duck Creek Technologies

HP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Duck Creek Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duck Creek Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Duck Creek is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HP and Duck Creek

The main advantage of trading using opposite HP and Duck Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Duck Creek 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 Duck Creek will offset losses from the drop in Duck Creek's long position.

The idea behind HP Inc and Duck Creek Technologies 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.