Correlation Between HP and IShares Technology

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

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

Diversification Opportunities for HP and IShares Technology

0.9

Correlation Coefficient

HP  IShares Technology

Almost no diversification

The 3 months correlation between HP and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and iShares Technology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Technology ETF 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 IShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Technology ETF has no effect on the direction of HP i.e., HP and IShares Technology go up and down completely randomly.

Pair Corralation between HP and IShares Technology

Considering the 90-day investment horizon HP Inc is expected to under-perform the IShares Technology. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 1.06 times less risky than IShares Technology. The stock trades about -0.13 of its potential returns per unit of risk. The iShares Technology ETF is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  16,534  in iShares Technology ETF on December 26, 2024 and sell it today you would lose (1,905) from holding iShares Technology ETF or give up 11.52% of portfolio value over 90 days.

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

HP Inc  vs.  iShares Technology ETF

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.

iShares Technology ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with HP and IShares Technology

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

The idea behind HP Inc and iShares Technology ETF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.