Correlation Between HP and The Dreyfus

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

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

Diversification Opportunities for HP and The Dreyfus

0.85

Correlation Coefficient

HP  The Dreyfus

Very poor diversification

The 3 months correlation between HP and The is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and The Dreyfus Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Dreyfus Sustainable 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 The Dreyfus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Dreyfus Sustainable has no effect on the direction of HP i.e., HP and The Dreyfus go up and down completely randomly.

Pair Corralation between HP and The Dreyfus

Considering the 90-day investment horizon HP Inc is expected to under-perform the The Dreyfus. In addition to that, HP is 1.46 times more volatile than The Dreyfus Sustainable. It trades about -0.13 of its total potential returns per unit of risk. The Dreyfus Sustainable is currently generating about -0.09 per unit of volatility. If you would invest  1,464  in The Dreyfus Sustainable on December 26, 2024 and sell it today you would lose (93.00) from holding The Dreyfus Sustainable or give up 6.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

HP Inc  vs.  The Dreyfus Sustainable

HP Inc

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

The Dreyfus Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Dreyfus Sustainable has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with HP and The Dreyfus

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

The idea behind HP Inc and The Dreyfus Sustainable 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.