Correlation Between Hewlett Packard and Gatos Silver

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

By analyzing existing cross correlation between Hewlett Packard Enterprise and Gatos Silver, you can compare the effects of market volatilities on Hewlett Packard and Gatos Silver 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 Hewlett Packard with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Gatos Silver.

Diversification Opportunities for Hewlett Packard and Gatos Silver

-0.63

Correlation Coefficient

Hewlett Packard  Gatos Silver

Excellent diversification

The 3 months correlation between Hewlett and Gatos is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Gatos Silver go up and down completely randomly.

Pair Corralation between Hewlett Packard and Gatos Silver

Assuming the 90 days trading horizon Hewlett Packard Enterprise is expected to generate 0.66 times more return on investment than Gatos Silver. However, Hewlett Packard Enterprise is 1.51 times less risky than Gatos Silver. It trades about 0.15 of its potential returns per unit of risk. Gatos Silver is currently generating about -0.14 per unit of risk. If you would invest  5,796  in Hewlett Packard Enterprise on October 26, 2024 and sell it today you would earn a total of  1,114  from holding Hewlett Packard Enterprise or generate 19.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.22%
Values	Daily Returns

Hewlett Packard Enterprise  vs.  Gatos Silver

Hewlett Packard Ente

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gatos Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hewlett Packard and Gatos Silver

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

The idea behind Hewlett Packard Enterprise and Gatos Silver 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.